| Research Abstract |
The cost of granting stock options is not limited to the cost that can be calculated by the grant date fair value method. There is another cost that should be considered. The cost of granting stock options to the audit officers is analyzed in this research. Audit officers are supposed to audit the activities of directors and employees, including financial statements. Independent accountant also audit financial statements of the company. The role of the audit officers and the effect of granting stock options to them are explained and discussed.
According to the International Financial Reporting Standard 2,it is required to report compensation expense associated with the grant of stock options in the income statement, based on its fair value at the grant date. The calculation of the fair value of stock option at the grant date will directly affect the company's earnings. So the estimation of that amount is very important. If the officers cannot, or will not sell the shares, not only the non transferability of the options, but also the non transferability of the shares should be taken into consideration. In this research, the data to prove that Japanese officers rarely sell shares of the corporation is presented. Such kind of attitude must be taken into consideration, when estimating the grant date fair value of stock options.
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