Corporate mergers and acquisitions (M&A) are now a common strategic choice for enterprises. As such, goodwill, which is a core asset of M&A activities, is pivotal for financial valuation and accounting. However, the phenomenon of ‘excess goodwill’, resulting from overvaluation due to management overconfidence and performance promises, poses significant risks, including potential financial statement distortions and increased litigation. This study investigates the intrinsic link between excess goodwill and corporate litigation risk by utilising theoretical analyses and empirical tests. By analysing data from A-share listed companies in Shanghai and Shenzhen from 2007 to 2022, we employed the regression residual method to measure excess goodwill and determine its impact on litigation risk through mediating factors such as financing constraints, risk-taking and agency costs. The findings indicate that excess goodwill significantly increases litigation risk, with a more pronounced effect on manufacturing firms and those with low internal control quality. This research provides valuable insights into optimising goodwill accounting treatment and enhancing enterprise risk management practices. The study's implications suggest that stricter internal controls and cautious goodwill valuation practices are essential to mitigate risks, ultimately contributing to the stability of the capital market and the protection of investor interests.

中文翻译：

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超额商誉与企业诉讼风险


企业并购（M&A）现已成为企业普遍的战略选择。因此，商誉作为并购活动的核心资产，对于财务估值和会计至关重要。然而，由于管理层过度自信和业绩承诺导致估值过高，导致“超额商誉”现象带来重大风险，包括潜在的财务报表扭曲和诉讼增加。本研究通过理论分析和实证检验，探讨了超额商誉与公司诉讼风险之间的内在联系。通过分析沪深A股上市公司2007年至2022年的数据，我们采用回归残差法测算超额商誉，并通过融资约束、风险承担和代理成本等中介因素判断其对诉讼风险的影响。研究结果表明，过多的商誉会显着增加诉讼风险，对制造企业和内部控制质量较低的企业影响更为明显。这项研究为优化商誉会计处理和增强企业风险管理实践提供了宝贵的见解。该研究的意义表明，更严格的内部控制和谨慎的商誉估值实践对于降低风险至关重要，最终有助于资本市场的稳定和投资者利益的保护。