This study examines UK firms' contracting cost incentives for capitalizing estimates of brand value. Results indicate that firms' decisions to capitalize acquired brands were influenced by the impact that the immediate write-off of goodwill to equity has on the London Stock Exchange's shareholder approval requirement for future acquisitions and disposals. These findings provide evidence of contracting costs that result from stock exchange mandated shareholder approval rules for planned transactions.

We investigate the market valuation of earnings and book value amounts prepared under IAS and US-GAAP to provide evidence for the debate between the US SEC and NYSE on whether foreign firms should be allowed to list in the US using IAS. We find that the US-GAAP earnings reconciliation adjustment is value-relevant and that US-GAAP amounts are valued differently for market value and return models, but not a price-per-share model. We also find that IAS amounts are more highly associated with price-per-share than US-GAAP amounts, and that US-GAAP amounts are more highly associated with security returns than IAS amounts.