search query: @author Bodie, Z. / total: 14
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| Author: | Bodie, Z. Kaplan, R.S. Merton, R.C. |
| Title: | For the last time: Stock options are an expense |
| Journal: | Harvard Business Review
2003 : MAR, VOL. 81:3, p. 62-71 |
| Index terms: | Management Pay Earnings Accounting Accounting standards Control Policy Corporate governance |
| Language: | eng |
| Abstract: | Should stock options be recorded as an expense on a company's income statement and balance sheet, or should they remain where they are, relegated to footnotes? The authors believe the case for expensing options is overwhelming. In this article, the authors examine and dismiss the principal claims put forward by those who continue to oppose options expensing. They demonstrate that stock-option grants have real cash-flow implications that need to be reported and detail the distortions that relegating stock-option accounting to footnotes creates. The authors agree that options are a powerful incentive, and failing to record a transaction that creates such powerful effects is economically indefensible. Worse, it encourages companies to favour options over alternative incentive systems. |
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