{"id":{"repo_id":"mit","oai_identifier":"oai:dspace.mit.edu:1721.1/68960"},"canonical_url":"https://search.dev.ndltd.org/etd/mit/oai:dspace.mit.edu:1721.1/68960","repository":{"repo_id":"mit","name":"MIT","base_url":"https://dspace.mit.edu/oai/request"},"display":{"title":"Rigid or flexible accounting rules? : evidence from purchase price adjustments","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.","abstract_html":"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.","abstract_has_math":false,"creators":["Johnson, Derek Christopher"],"institution":"Massachusetts Institute of Technology","degree_name":null,"degree_level":null,"degree_discipline":null,"degree_department":"Sloan School of Management.","school":null,"contributors":[],"advisors":["John Core and Joseph Weber."],"committee_chairs":[],"committee_members":[],"year":2011,"date_issued":"2011","date_published":"2011","updated_at":"2026-07-22T22:20:47Z","subjects":["Sloan School of Management."],"languages":["eng"],"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."],"rights_urls":["http://dspace.mit.edu/handle/1721.1/7582"],"identifier_entries":[]},"links":{"outbound_url":"http://hdl.handle.net/1721.1/68960","outbound_label":"Handle","outbound_source":"dc:identifier.uri"},"metadata_groups":[{"id":"people","label":"People","entries":[{"key":"dc:contributor.advisor","label":"Advisor","values":["John Core and Joseph Weber."]},{"key":"dc:contributor.department","label":"Department","values":["Sloan School of Management."]},{"key":"dc:contributor.other","label":"Dc Contributor Other","values":["Sloan School of Management."]},{"key":"dc:creator","label":"Author","values":["Johnson, Derek Christopher"]}]},{"id":"academic_context","label":"Academic Context","entries":[{"key":"dc:date.accessioned","label":"Dc Date Accessioned","values":["2012-01-30T17:06:06Z"]},{"key":"dc:date.available","label":"Dc Date Available","values":["2012-01-30T17:06:06Z"]},{"key":"dc:date.issued","label":"Date","values":["2011"]},{"key":"dc:publisher","label":"Institution","values":["Massachusetts Institute of Technology"]},{"key":"dc:type","label":"Dc Type","values":["Thesis"]}]},{"id":"subjects_keywords","label":"Subjects and Keywords","entries":[{"key":"dc:subject","label":"Dc Subject","values":["Sloan School of Management."]}]},{"id":"language_rights","label":"Language and Rights","entries":[{"key":"dc:language.iso","label":"Language (ISO)","values":["eng"]},{"key":"dc:rights","label":"Dc Rights","values":["M.I.T. theses are protected by copyright. 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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."]},{"key":"dc:description.degree","label":"Dc Description Degree","values":["Ph.D."]},{"key":"dc:title","label":"Title","values":["Rigid or flexible accounting rules? : evidence from purchase price adjustments"]}]}],"canonical_facts":{"dc:contributor.advisor":["John Core and Joseph Weber."],"dc:contributor.department":["Sloan School of Management."],"dc:contributor.other":["Sloan School of Management."],"dc:creator":["Johnson, Derek Christopher"],"dc:date.accessioned":["2012-01-30T17:06:06Z"],"dc:date.available":["2012-01-30T17:06:06Z"],"dc:date.issued":["2011"],"dc: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)."],"dc:description.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."],"dc:description.degree":["Ph.D."],"dc:identifier.uri":["http://hdl.handle.net/1721.1/68960"],"dc:language.iso":["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.uri":["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"]},"updated_at":"2026-07-22T22:20:47Z"}