Financial Accounting Blog

Thursday, April 29, 2004

In an article on, Dr. Vahan Janjigian describes both sides of the argument about expensing stock options and offers his opinion:
"Those who favor the FASB's proposal say it will improve accounting honesty. Yet the truth is that expensing options before they are exercised obscures economic reality. Whether the accounting is done for financial purposes or tax purposes, the honest thing to do is to require expensing only when there is an expense, i.e., when the option is exercised. The FASB's proposal merely kowtows to those who want to punish corporations for the excesses of the 1990s. It does little to serve the interests of shareholders."