MIT Libraries logoDSpace@MIT

MIT
View Item 
  • DSpace@MIT Home
  • MIT Libraries
  • MIT Theses
  • Doctoral Theses
  • View Item
  • DSpace@MIT Home
  • MIT Libraries
  • MIT Theses
  • Doctoral Theses
  • View Item
JavaScript is disabled for your browser. Some features of this site may not work without it.

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

Author(s)
Johnson, Derek Christopher
Thumbnail
DownloadFull printable version (4.721Mb)
Other Contributors
Sloan School of Management.
Advisor
John Core and Joseph Weber.
Terms of use
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. http://dspace.mit.edu/handle/1721.1/7582
Metadata
Show full item record
Abstract
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.
Description
Thesis (Ph. D.)--Massachusetts Institute of Technology, Sloan School of Management, 2011.
 
Cataloged from PDF version of thesis.
 
Includes bibliographical references (p. 37-41).
 
Date issued
2011
URI
http://hdl.handle.net/1721.1/68960
Department
Sloan School of Management
Publisher
Massachusetts Institute of Technology
Keywords
Sloan School of Management.

Collections
  • Doctoral Theses

Browse

All of DSpaceCommunities & CollectionsBy Issue DateAuthorsTitlesSubjectsThis CollectionBy Issue DateAuthorsTitlesSubjects

My Account

Login

Statistics

OA StatisticsStatistics by CountryStatistics by Department
MIT Libraries
PrivacyPermissionsAccessibilityContact us
MIT
Content created by the MIT Libraries, CC BY-NC unless otherwise noted. Notify us about copyright concerns.