e-journal

Preemption of compliance costs and the voluntary adoption of SFAS No. 123(R)

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Purpose – This paper aims to study a preemption proposition for the compliance costs associated with
stock option expensing under SFAS 123(R) by examining whether early adopters used their discretion
over option pricing model inputs to mitigate the adoption effect.
Design/methodology/approach – The paper uses a matched sample approach of firms that
voluntarily adopted stock option expensing during the 2002-2004 period and similar firms that waited
until the mandatory expensing. The paper empirically examines some determinants of voluntary
adoption, and the changes in option pricing model inputs during the period leading to mandatory
expensing.
Findings – The paper reports evidence that voluntary adopters of stock option expensing during the
2002-2004 period have used the period leading to mandatory expensing to preempt its compliance cost
effect. The authors exercised their discretion by decreasing estimates for stock price volatility and
time-to-maturity to preempt or minimize the reduction in earnings before mandatory adoption date.
Originality/value – Results of this paper are useful to accounting regulators in understanding the
reaction of financial statement preparers to deliberations, effective dates and voluntary early adoption
terms of the accounting standards setting process.

Keywords Accounting, Preemption, Pricing model, Stock options, Voluntary adoption

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Informasi Detail

Judul Seri

Journal of Financial Reporting and Accounting

No. Panggil

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Penerbit

: ., 2014

Deskripsi Fisik

Journal of Financial Reporting and Accounting Vol. 12 No. 1, 2014 pp. 2-20

Bahasa

English

ISBN/ISSN

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Klasifikasi

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Tipe Isi

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Tipe Media

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Tipe Pembawa

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Edisi

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Subjek

AKUNTANSI

Info Detail Spesifik

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Pernyataan Tanggungjawab

Asmawati/Syahrial

Versi lain/terkait

Lampiran Berkas

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