What question did this study set out to answer?

The aim is to assess how the FASB's proposal affects the reporting of compensation expenses related to executive stock options.

Valuation of Executive Stock Options and the FASB Proposal.

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This article evaluates the impact of FASB's proposal on compensation expenses in firms granting stock options, suggesting broader implications.

The aim is to assess how the FASB's proposal affects the reporting of compensation expenses related to executive stock options.
Applied FASB's proposal to a random sample of firms granting stock options.
Analyzed the impact of stock option compensation on operating income.
Compared existing accounting principles against the FASB proposal for fair value measurement.
Currently, no compensation expense is recorded for stock options at market price grants.
FASB's proposal would require fair value measurement at the vesting date, impacting reported expenses.
Inadequacies of current methods show a gap in accounting for executive stock options.

Foster et al. (1991) studied this question.

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This article evaluates the impact of FASB's proposal on compensation expenses in firms granting stock options, suggesting broader implications.