Determinants of goodwill and its impact on post-merger and acquisition performance in Thailand: a firm-level analysis

Abstract

This study examines factors determining the size of goodwill by merger and acquisition transaction and its effect on an acquiring firm’s future performance using sample data of listed firms in Thailand from 2008 to 2019. The estimated results show goodwill depends on target’s customer base, target’s intangible assets and expected synergies. Combining core goodwill with the inherent strengths of an acquiring firm significantly improves its future performance. In contrast, abnormal goodwill in interaction with the target’s size significantly decreases its profitability. The acquirer and the target must cultivate their own strengths to benefit from earnings generated by goodwill.