2021 Volume 34 Issue 1 Pages 41-56
In this study I focus on companies that recorded goodwill. And, I conduct a comparative analysis of the impact of goodwill on future performance change and the impact of other major investments such as capital investment, R & D investment, and advertising investment on future performance change. In addition, I examine the impact of financial characteristics on the relationship between goodwill / other major investments and future performance change. I find that increased goodwill and capital investment have a negative impact on future performance change. I also find that financial characteristics have impacts on the investment efficiency of M & A investment, capital investment, R & D investment, and advertising investment, but the impacts differ for each investment. For example, companies with relatively large cash holdings make relatively efficient investments in M & A investment. Companies with extremely large cash holdings tend to make relatively efficient investments in R & D investment, but overinvest in capital investment.
