Does recognized goodwill function as an economic resource?

<p>This study examines whether recognized goodwill functions as an economic resource by analyzing the association between newly recognized goodwill and future cumulative EBITDA. Using firm-year panel data for Japanese listed firms from 2011 to 2024 and hand-collected goodwill disclosures, this study employs regression analyses with firm and year fixed effects. The results show a consistently negative within-firm association between newly recognized goodwill and future cumulative EBITDA, with the effect becoming more pronounced over longer horizons. Additional analyses indicate that the results are driven by the magnitude of goodwill and are stronger for larger acquirers. These findings challenge the assumption underlying goodwill recognition as a long-term economic resource.</p>