Economics at your fingertips  

Accounting for Option-based Compensation: "The Economic Cost Approach"

Charles I. Harter and T. Harikumar
Additional contact information
Charles I. Harter: North Dakota State University,

Journal of Business Finance & Accounting, 2002, vol. 29, issue 7&8, 1007-1022

Abstract: The "intrinsic value" approach amortizes over the life of the option, the difference between the stock price on the date of the grant and the exercise price of the option. The "fair market value" approach amortizes over the life of the option, the market value of stock options on the date of the grant. These approaches do not reflect the changes in the option-based compensation cost after the grant date. This paper proposes an "economic cost approach" that not only adjusts for the changes in the value of the options during its life but also records the issuance of the stock at fair market value on the exercise date. Copyright Blackwell Publishers Ltd 2002.

Date: 2002
References: Add references at CitEc
Citations: View citations in EconPapers (4) Track citations by RSS feed

Downloads: (external link) link to full text (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link:

Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=0306-686X

Access Statistics for this article

Journal of Business Finance & Accounting is currently edited by P. F. Pope, A. W. Stark and M. Walker

More articles in Journal of Business Finance & Accounting from Wiley Blackwell
Bibliographic data for series maintained by Wiley Content Delivery ().

Page updated 2019-02-23
Handle: RePEc:bla:jbfnac:v:29:y:2002:i:7&8:p:1007-1022