An Analysis and Comparison of Bankers' Perceptions of Stock Options in 1999 and 2005

Date

2008

Journal Title

Journal ISSN

Volume Title

Publisher

Academy of Banking Studies Journal

Abstract

Research to date on accounting for stock options has focused the analysis on a single group of corporate stakeholders, stockholders. This paper reports the results of a survey administered to another group of stakeholders, creditors. Commercial bankers were surveyed regarding the accounting treatment for stock options and the perceived impact of stock options on financial statements, firm valuation, and the loan decision. A unique aspect of our study is that we surveyed bankers during two distinct periods. We first surveyed bankers in 1999, well after the debate surrounding SFAS 123 (FASB, 1995), but before the resurgence of the debate leading up to SFAS 123(R) (FASB, 2004). We surveyed again in 2005, as companies were implementing SFAS 123(R). This allows us to comment on the impact of public debate preceding the rule revision on the perceptions of a group of well-informed financial statement users.

We find bankers in both periods view stock options as compensation. The method of accounting does not matter if relevant information is disclosed. More experienced loan officers from 1999, and those who deal with stock options frequently from 2005, are less negative than others about the impact of stock options on shareholder interest in company assets.

Description

Keywords

Bankers--Compensation and benefits, Bankers--Comparative analysis, Employee Stock Options--Accounting and auditing, Employee Stock Options--Analysis

Citation