Title

Stock Option Disclosures and the Usefulness of Accounting Information

DOI

10.6293/AQAFA.2010.08.10

Authors

Myung Seok Park;Taewoo Park

Key Words

Stock option ; Earnings per share ; Dilution effect ; Accounting disclosure

PublicationName

Advances in Quantitative Analysis of Finance and Accounting

Volume or Term/Year and Month of Publication

8期(2010 / 06 / 01)

Page #

223 - 249

Content Language

英文

English Abstract

This study examines the usefulness of employee stock option disclosures in pricing firms. We conjecture that employee stock option grants result in better alignment of employees' interests with those of shareholders, creating higher future earnings (incentive effect), but that the future earnings should be shared between shareholders and option holders (dilutive effect). Consistent with our predictions, we find that innovations in the Black Scholes value of option grants are positively related to contemporaneous stock returns and that the number of outstanding options is negatively related to the magnitude of the earnings response coefficients. We also provide evidence that earnings per share, both basic and fully diluted, have little explanatory power for contemporaneous stock returns for firms with high levels of options outstanding. Further, the results show that firms with a larger number of options outstanding generate higher future accounting returns. Overall, the evidence suggests that information disclosures concerning employee stock options are potentially relevant and useful to investors.

Topic Category 社會科學 > 經濟學
社會科學 > 財金及會計學
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Times Cited
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  2. 廖仲斌(2007)。即時三度立體心臟超音波應用於心房中隔缺損測量之研究。中山醫學大學醫學研究所學位論文。2007。1-91。 
  3. 高孟平(2004)。數位信號與影像之任意放大與縮小演算法。臺灣大學電信工程學研究所學位論文。2004。1-99。