Employee stock options and market efficiency

Employee stock options and market efficiency

This study investigates market reaction to SFAS 123 Revised, `Share Based Payment,' which requires companies to recognize the fair value of employee stock options as expense on the income statement. Using a sample of 128 firms for the 2004 and 2005 periods, we find that markets have efficiently...

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Veröffentlicht in:Journal of applied business research 2007-01, Vol.23 (2), p.1-6
Hauptverfasser: Laux, Judy A, N'Dir, Abdou
Format: Artikel
Sprache:eng
Schlagworte:
Business studies
Employees
Financial incentives
Financial information
Market analysis
News
Options on stocks
Stock exchange
U.S.A
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Zusammenfassung:This study investigates market reaction to SFAS 123 Revised, `Share Based Payment,' which requires companies to recognize the fair value of employee stock options as expense on the income statement. Using a sample of 128 firms for the 2004 and 2005 periods, we find that markets have efficiently incorporated information formerly disclosed only in footnotes to the financial statements, effectively nullifying the argument that formally recognizing the expense would have a deleterious effect on stock prices of firms offering this type of compensation.
ISSN:0892-7626