Towards an understanding of the phases of goodwill accounting in four Western capitalist countries: From stakeholder model to shareholder model

The objective of this paper is to illustrate that the change in shareholders’ attitude towards firms (from stakeholder model to shareholder model) influences the accounting treatments of goodwill. This study is based on four countries (Great Britain, the United States, Germany, and France) and covers more than a century, starting in 1880. The authors explain that all these countries have gone through four identified phases of goodwill accounting, classified as (1) “static”(immediate or rapid expensing), (2) “weakened static” (write-off against equity), (3) “dynamic” (recognition with amortization over a long period) and (4) “actuarial” (recognition without amortization but with impairment if necessary).