Sangam: A Confluence of Knowledge Streams

Rigid or flexible accounting rules? : evidence from purchase price adjustments

Show simple item record

dc.contributor John Core and Joseph Weber.
dc.contributor Sloan School of Management.
dc.contributor Sloan School of Management.
dc.creator Johnson, Derek Christopher
dc.date 2012-01-30T17:06:06Z
dc.date 2012-01-30T17:06:06Z
dc.date 2011
dc.date 2011
dc.date.accessioned 2022-05-04T06:27:32Z
dc.date.available 2022-05-04T06:27:32Z
dc.identifier http://hdl.handle.net/1721.1/68960
dc.identifier 773929580
dc.identifier.uri http://localhost:8080/xmlui/handle/CUHPOERS/3011
dc.description Thesis (Ph. D.)--Massachusetts Institute of Technology, Sloan School of Management, 2011.
dc.description Cataloged from PDF version of thesis.
dc.description Includes bibliographical references (p. 37-41).
dc.description I examine the negotiation of accounting rules in the purchase price adjustment clause of corporate acquisition agreements. Purchase price adjustments make the deal value contingent on the target's closing working capital or net worth. Some purchase price adjustments use "rigid" accounting and specify which measurement rules will be used to prepare the closing-date balance sheet. Many more use "flexible" accounting and require only GAAP compliance. I provide evidence that hidden action and adverse selection problems determine whether the buyer and seller use rigid or flexible accounting. I also provide evidence that this choice is associated with other features of the contract related to purchase price adjustment flexibility and to the prospect of hold-up. Estimates of the effect of rigid accounting on finalized purchase price adjustments are consistent with implications of the adverse selection and hold-up problems.
dc.description by Derek Christopher Johnson.
dc.description Ph.D.
dc.format 82 p.
dc.format application/pdf
dc.language eng
dc.publisher Massachusetts Institute of Technology
dc.rights M.I.T. theses are protected by copyright. They may be viewed from this source for any purpose, but reproduction or distribution in any format is prohibited without written permission. See provided URL for inquiries about permission.
dc.rights http://dspace.mit.edu/handle/1721.1/7582
dc.subject Sloan School of Management.
dc.title Rigid or flexible accounting rules? : evidence from purchase price adjustments
dc.type Thesis


Files in this item

Files Size Format View
773929580-MIT.pdf 4.951Mb application/pdf View/Open

This item appears in the following Collection(s)

  • DSpace@MIT [2699]
    DSpace@MIT is a digital repository for MIT's research, including peer-reviewed articles, technical reports, working papers, theses, and more.

Show simple item record

Search DSpace


Advanced Search

Browse