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Despite a flurry of excitement in the immediate aftermath of their action, this clarification does not change FASB's objective, to "reflect how much an asset would be sold for in an orderly transaction (as opposed to a distressed or forced transaction) at the date of the financial statements".
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The Merger Agreement neither forced a transaction on the shareholders, nor deprived them of the right to receive alternative offers.
Market forces, transaction costs and Coasian bargaining theory do not care if we believe in them or not.
Paying by credit card would automatically force the transaction to be shown on the cash register.
Along with its bankers, the company appears to be forcing this transaction down shareholders' throats and failing to provide evidence that this is the best deal available.
International Specialty Products said yesterday that it was terminating discussions with its takeover target, the Dexter Corporation, and would continue its effort to oust the manufacturing company's board to force a transaction.
And, as long as the Microsoft bid is alive, Yahoo! shareholders will force the transaction to go through.
But United Rentals highlighted a section of the takeover agreement which states that "irreparable damage" would occur if the merger agreement is breached and therefore gives United Rentals the right to force the transaction to be completed.
So the transaction forced a guppy to regulate a whale.
It also throws doubts over major computer projects ranging from identity cards to plans to force more transactions with the state online.
That argument is based on the idea that forcing these transactions out into the open, and forcing those who trade in them to put up margin, will raise the costs for those who use the derivatives.
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Justyna Jupowicz-Kozak
CEO of Professional Science Editing for Scientists @ prosciediting.com