An Evaluation Of Fair Value Accounting For Employee Stock Options
نویسندگان
چکیده
منابع مشابه
Accounting for Employee Stock Options: An Economics Perspective
Instead of relying on accounting principles and illustrative accounting examples, this paper examines the rationale for ESO expensing from an economics perspective and has the following findings. In principle, while ESO expensing is justified under ESOs’ expense-postponing function, it is not under the employee-stimulating function. In practice, ESOs’ risk-sharing function poses a fundamental d...
متن کاملOn the Accounting Valuation of Employee Stock Options
In its Exposure Draft, "Accounting for Stock-based Compensation," FASB proposes that either the Black-Scholes or binomial option pricing model be used to expense employee stock options, and that the value of these options be measured on their grant date with typically modest ex-post adjustment. This brings the accounting profession squarely up against the Scylla of imposing too narrow a set rul...
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Changes in credit risk may arise when either the value or the risk of corporate assets changes. Changes in the equity value associated with the changes in the asset value and changes in asset risk can be characterized into potentially countervailing direct and indirect effects. The indirect effect of risk on equity value is a function of factors that affect the debt value of including leverage,...
متن کاملEmployee Stock Options: Accounting for Optimal Hedging, Suboptimal Exercises, and Contractual Restrictions
Employee stock options (ESOs) have become an integral component of compensation in the U.S. In view of their significant cost to firms, the Financial Accounting Standards Board (FASB) has mandated expensing ESOs since 2004. The main difficulty of ESO valuation lies in the uncertain timing of exercises, and a number of contractual restrictions of ESOs further complicate the problem. We present a...
متن کاملAnalytic Pricing of Employee Stock Options∗†
We introduce a model that captures the main properties that characterize employee stock options (ESO), in particular, the likelihood of early voluntary exercise and the obligation to exercise immediately if the employee leaves the firm, except if this happens before options are vested, in which case the options are forfeited. We derive an analytic formula for the price of the ESO and analyze it...
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ژورنال
عنوان ژورنال: International Business & Economics Research Journal (IBER)
سال: 2012
ISSN: 2157-9393,1535-0754
DOI: 10.19030/iber.v11i7.7068