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Accounting standards for employee stock option disclosure

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  • Geoffrey Poitras

Abstract

Recent changes to accounting standards for employee stock-based compensation with contingent features are examined. The implementation of FAS 123R by the Financial Accounting Standards Board in December 2005 now requires the fair value of such expenses to be recorded in net income. This accounting change is now impacting the reported financial statements of firms that have been substantial users of employee stock options. This provides an opportunity to directly observe the actual impact FAS 123R is having on such firms. Arguments for and against mandatory expensing are reviewed and an assessment of the contrasting positions provided. Significant limitations of current reporting requirements for executive stock options identified in Poitras (2004) still have not been addressed.

Suggested Citation

  • Geoffrey Poitras, 2007. "Accounting standards for employee stock option disclosure," International Journal of Business Governance and Ethics, Inderscience Enterprises Ltd, vol. 3(4), pages 473-487.
    • Handle: RePEc:ids:ijbget:v:3:y:2007:i:4:p:473-487
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    Cited by:

    1. Shiwakoti, Radha K. & Rutherford, Brian A., 2010. "Expensing of share-based payments and its impact on large UK companies," The British Accounting Review, Elsevier, vol. 42(4), pages 269-279.

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