'The True and Fair View' of Executive Stock Option Valuation
We compare the market values of executive stock option (ESO) trades with their Black & Scholes (1973) model values calculated following the major accounting standards, SFAS No. 123r and IFRS2. Our results show major underpricing compared to the traditional B&S method values. This should be c...
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| Veröffentlicht in: | The European accounting review 2006-09, Vol.15 (3), p.351-366 |
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| container_title | The European accounting review |
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| creator | Ikäheimo, Seppo Kuosa, Nuutti Puttonen, Vesa |
| description | We compare the market values of executive stock option (ESO) trades with their Black & Scholes (1973) model values calculated following the major accounting standards, SFAS No. 123r and IFRS2. Our results show major underpricing compared to the traditional B&S method values. This should be considered while applying SFAS No. 123r and IFRS2 for estimating fair values. Especially time to expiration has a major influence on the undervaluation suggesting that the possibility of a change in corporate structure lowers the cost of ESOs to shareholders. |
| doi_str_mv | 10.1080/09638180600916267 |
| format | Article |
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| ispartof | The European accounting review, 2006-09, Vol.15 (3), p.351-366 |
| issn | 0963-8180 1468-4497 |
| language | eng |
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| source | RePEc; EBSCOhost Business Source Complete; Taylor & Francis Journals Complete |
| subjects | Accounting standards Accounting theory Business organization Comparative analysis FASB statements Financial accounting Financial accounting standards Financial models IFRS 2 International accounting standards International Financial Reporting Standards Market value Options on stocks Senior management SFAS 123R Stock options Stock prices Studies |
| title | 'The True and Fair View' of Executive Stock Option Valuation |
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