Arbeitspapier
Do companies exploit accounting rules for broad-based stock option plans? A case study
Several studies indicate that stock option plans are becoming more and more a substantial part of compensation schemes in U.S. companies. This paper argues that for an employer the attractiveness of stock options arises from the U.S. Generally Accepted Accounting Principles (US-GAAP) which require no charge to earnings for specifically designed stock option plans if a company opts for footnote disclosure. This poses a substantial problem for security analysis since a firm's earnings may be considerably upward biased. Based on a case study of 20 companies out of the S&P 500 which rely heavily on employee stock options we arrive at the conclusion that the amount of hidden compensation cost can be significant. For some of the companies the misrepresentation of stated earnings exceeds usual immateriality limits by far. Therefore, we propose that the fair value method of Statement No. 123 Financial Accounting Standards Board should be made compulsory in order to restore the true and fair view which income as stated should provide.
- Language
-
Englisch
- Bibliographic citation
-
Series: CoFE Discussion Paper ; No. 00/27
- Classification
-
Wirtschaft
- Subject
-
Bilanzpolitik
Leistungsentgelt
Aktienoption
Bilanzierungsgrundsätze
USA
- Event
-
Geistige Schöpfung
- (who)
-
Hess, Dieter
Lueders, Eric
- Event
-
Veröffentlichung
- (who)
-
University of Konstanz, Center of Finance and Econometrics (CoFE)
- (where)
-
Konstanz
- (when)
-
2000
- Handle
- URN
-
urn:nbn:de:bsz:352-opus-5780
- Last update
-
10.03.2025, 11:43 AM CET
Data provider
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
Object type
- Arbeitspapier
Associated
- Hess, Dieter
- Lueders, Eric
- University of Konstanz, Center of Finance and Econometrics (CoFE)
Time of origin
- 2000
Other Objects (12)
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L'exploit d'Archimède.
To exploit our successes
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Do companies exploit accounting rules for broad-based stock option plans? : a case study [[Elektronische Ressource]]
New economy accounting : why are broad-based stock option plans so attractive?
New Economy accounting: Why are broad-based stock option plans so attractive?
Management accounting and integrated information systems: How to exploit the potential for management accounting of information technology
L'exploit d'Archimède.
To exploit our successes
Option framework for the valuation of biopharmaceutical companies
Cost accounting in German multinational companies : an empirical analysis
How management accounting can be helpful for startup companies
Intimacy : plug-in - exploit - care
L'exploit de la coulisse
Le Dernier Exploit d'un guerrier
Do companies exploit accounting rules for broad-based stock option plans? : a case study [[Elektronische Ressource]]
New economy accounting : why are broad-based stock option plans so attractive?
New Economy accounting: Why are broad-based stock option plans so attractive?
Management accounting and integrated information systems: How to exploit the potential for management accounting of information technology
L'exploit d'Archimède.
To exploit our successes
Option framework for the valuation of biopharmaceutical companies
Cost accounting in German multinational companies : an empirical analysis
How management accounting can be helpful for startup companies
Intimacy : plug-in - exploit - care
L'exploit de la coulisse