Accounting for executive stock options: A case study in avoiding tough decisions

Coulton, J; Taylor, S

Accounting for executive stock options: A case study in avoiding tough decisions

Coulton, J Taylor, S

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Publication Type:: Journal Article
Citation:: Australian Accounting Review, 2002, 12 (26), pp. 3 - 10
Issue Date:: 2002-01-01

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Field	Value	Language
dc.contributor.author	Coulton, J	en_US
dc.contributor.author	Taylor, S https://orcid.org/0000-0001-8870-4966	en_US
dc.date.issued	2002-01-01	en_US
dc.identifier.citation	Australian Accounting Review, 2002, 12 (26), pp. 3 - 10	en_US
dc.identifier.issn	1035-6908	en_US
dc.identifier.uri	http://hdl.handle.net/10453/10235
dc.description.abstract	We review the development of accounting requirements for executive stock options (ESOs) and find that the standard-setting process has been susceptible to pressure groups including the corporate sector, politicians and even the accounting profession itself. The failure of Australian and overseas accounting regulators to take tough decisions may have created a systematic bias towards the use of ESOs which can result in grossly inefficient compensation structures motivated by a desire to maximise reported profits rather than to create optimal managerial incentives. We conclude that most of the arguments against recognition of stock option expense can be dismissed as blatant self-interest at worst, or remarkably muddled thinking at best. © 2002 CPA Australia.	en_US
dc.relation.ispartof	Australian Accounting Review	en_US
dc.relation.isbasedon	10.1111/j.1835-2561.2002.tb00190.x	en_US
dc.title	Accounting for executive stock options: A case study in avoiding tough decisions	en_US
dc.type	Journal Article
utslib.citation.volume	26	en_US
utslib.citation.volume	12	en_US
utslib.for	150303 Corporate Governance and Stakeholder Engagement	en_US
utslib.for	150103 Financial Accounting	en_US
utslib.for	1501 Accounting, Auditing and Accountability	en_US
utslib.for	1499 Other Economics	en_US
dc.location.activity	Darwin, Northern Territory, Australia
pubs.embargo.period	Not known	en_US
pubs.organisational-group	/University of Technology Sydney
pubs.organisational-group	/University of Technology Sydney/Faculty of Business
pubs.organisational-group	/University of Technology Sydney/Faculty of Business/Accounting Discipline
utslib.copyright.status	closed_access
pubs.issue	26	en_US
pubs.publication-status	Published	en_US
pubs.volume	12	en_US

Abstract:

We review the development of accounting requirements for executive stock options (ESOs) and find that the standard-setting process has been susceptible to pressure groups including the corporate sector, politicians and even the accounting profession itself. The failure of Australian and overseas accounting regulators to take tough decisions may have created a systematic bias towards the use of ESOs which can result in grossly inefficient compensation structures motivated by a desire to maximise reported profits rather than to create optimal managerial incentives. We conclude that most of the arguments against recognition of stock option expense can be dismissed as blatant self-interest at worst, or remarkably muddled thinking at best. © 2002 CPA Australia.

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http://hdl.handle.net/10453/10235