Accounting for stock-based compensation: an extended clean surplus relation
Residual income valuation is based on the assumption that the clean surplus relation holds. As pointed out by Ohlson (2000), among others, the standard clean surplus relation is frequently violated. Moreover, standard residual income valuation models rest on the implicit assumption that future stated earnings belong to current shareholders only. This is clearly invalid for companies granting employee options. In order to overcome these deficiencies, this paper establishes an extension of the clean surplus relation and derives simple analytical solutions for the value of outstanding stocks in terms of already known accounting information.
|Date of creation:||2001|
|Date of revision:|
|Contact details of provider:|| Postal: L 7,1; D - 68161 Mannheim|
Web page: http://www.zew.de/
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Brenner, Menachem & Sundaram, Rangarajan K. & Yermack, David, 2000.
"Altering the terms of executive stock options,"
Journal of Financial Economics,
Elsevier, vol. 57(1), pages 103-128, July.
- Menachem Brenner & Rangarajan K. Sundaram & David Yermack, 1998. "Altering the Terms of Executive Stock Options," New York University, Leonard N. Stern School Finance Department Working Paper Seires 98-010, New York University, Leonard N. Stern School of Business-.
- Aboody, David, 1996. "Market valuation of employee stock options," Journal of Accounting and Economics, Elsevier, vol. 22(1-3), pages 357-391, October.
- Viral Acharya & Kose John & Rangarajan K. Sundaram, 1999.
"On the Optimality of Resetting Executive Stock Options,"
New York University, Leonard N. Stern School Finance Department Working Paper Seires
99-087, New York University, Leonard N. Stern School of Business-.
- Acharya, Viral V. & John, Kose & Sundaram, Rangarajan K., 2000. "On the optimality of resetting executive stock options," Journal of Financial Economics, Elsevier, vol. 57(1), pages 65-101, July.
- Chance, Don M. & Kumar, Raman & Todd, Rebecca B., 2000. "The 'repricing' of executive stock options," Journal of Financial Economics, Elsevier, vol. 57(1), pages 129-154, July.
When requesting a correction, please mention this item's handle: RePEc:zbw:zewdip:5397. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (ZBW - German National Library of Economics)
If references are entirely missing, you can add them using this form.