Accounting Choices and Director Interlocks: A Social Network Approach to the Voluntary Expensing of Stock Option Grants
We adopt a social network perspective of accounting choices and argue that voluntary expensing of stock option grants by firms may be driven by social influence and learning within a network of director interlocks. We find that firms are more likely to expense stock option grants voluntarily when they have inside director interlocks with (1) other firms that do likewise, and (2) institutional investors of firms accused of financial reporting fraud. This study contributes to extant research by highlighting that a social network approach complements a cost-and-benefit approach (or an economic perspective) when examining the accounting practices of firms. Copyright (c) 2008 The Authors Journal compilation (c) 2008 Blackwell Publishing Ltd.
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Volume (Year): 35 (2008-11)
Issue (Month): 9-10 ()
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