To purchase or authenticate to the full-text of this article, please visit this link: http://dx.doi.org/10.1111/j.1467-629X.2007.00246.x Byline: Kieran James (a), Janice How (b), Peter Verhoeven (b) Keywords: Accounting choice; Bid premium; Intangible assets; Purchased goodwill; Signalling theory Abstract: Abstract This research explores the empirical association between takeover bid premium and acquired (purchased) goodwill, and tests whether the strength of the association changes after the passage of approved accounting standard AASB 1013 in Australia in 1988. AASB 1013 mandated capitalization and amortization of acquired goodwill to the income statement over a maximum period of 20 years. We use regressions to assess how the association between bid premium and acquired goodwill varies in the pre-AASB and post-AASB 1013 periods after controlling for confounding factors. Our results show that reducing the variety of accounting policy options available to bidder management after an acquisition results in a systematic reduction in the strength of the association between premium and goodwill. Author Affiliation: (a)School of Accounting, Economics & Finance, University of Southern Queensland, Toowoomba, 4350, Australia (b)Department of Accounting and Finance, University of Auckland, Auckland, 1020, New Zealand Article History: Received 10 October 2006; accepted 8 November 2007 by Robert Faff (Edit).