2011 Fiscal Year Final Research Report
Employees' service and Expensing of Employee Stock Options
| Project/Area Number |
22730362
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| Research Category |
Grant-in-Aid for Young Scientists (B)
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| Allocation Type | Single-year Grants |
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| Research Field |
Accounting
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| Research Institution | Reitaku University |
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Principal Investigator |
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| Project Period (FY) |
2010 – 2011
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| Keywords | 契約理論 / 従業員ストック・オプション / 労働サービス / 費用計上の根拠 |
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| Research Abstract |
I examined the basis for expensing of employee stock options under current accounting standards. Specifically, I used contract theory based model analysis to compare employee services to the employee stock options given in compensation. This analysis showed that employee services and employee stock options were not necessarily equivalent in terms of either economic value or fair value, neither at the point at which the stock options were granted nor when exercised. My analysis indicated the following. First, that options may be granted based not on employee services offered when the rights were established, but in anticipation for future services. Second, that it may not be possible to isolate services during specified periods. Third, that even if the problem of isolating employee services during specific periods were surmounted, that, normally, services and options are not equivalent in value. As a result of these, given the current accounting standards, in which employee services are themselves considered to be costs, inappropriate understanding of costs may result in simple allocation of retained earnings capital.
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