The authors hope that FASB will reconsider the exercise date intrinsic method, thus rendering the accounting for the cost of employee stock options
much less complex and much more accurate.
Commencing in 2011, corporations and mutual fund trusts that provide employee stock options
will not be entitled to rely on various statements made by the CRA suggesting that withholding in respect of stock options may not be required or may be reduced.
While comparing the outcomes of panels A and B, though the agency theory is supported in both panels, the results are more favorable for the sorting and retention model in case of employee stock option
Even though most employee stock options
are granted at-the-money and so have zero intrinsic value (that is, market price minus exercise price), they have positive value at the grant date because of the volatility value of the option.
It generally assigns a higher value to options issued at a higher price, which isn't reflective of the employee stock options
The key distinction is that in all estimations, [[alpha].sub.2], the coefficient on employee stock option
expense (ESOEXP) is not significantly positive (in fact, it is negative in 1996).
It is motivated by the controversy surrounding the usefulness of pro forma net income disclosures using the fair value method to account for employee stock options
. We find a significant negative correlation between pro forma net income and security returns.
They construct a sample of employee stock option
plans for 125 S&P 500 firms from 1994 to 1998.
Companies must consider their unique circumstances when deciding whether or not to reprice employee stock options
Nevertheless, it is still possible for accounting theorists to argue that an employee stock option
has some value--i.e., its value is not zero--and good accounting practice should recognize a value of some kind, if only to vindicate the traditional accounting concept of conservatism.
The contract - which covers about 10,000 workers - reportedly includes wage increases, an employee stock option
plan and premium pay for bilingual reservation agents.