Evidence on differences between recognition and disclosure: A comparison of inputs to estimate fair values of employee stock options

Preeti Choudhary

Journal of Accounting and Economics, 2011, vol. 51, issue 1, 77-94

Abstract: I investigate reliability differences across recognition and disclosure regimes to shed light on differing incentives and reporting of employee stock option (ESO) fair values. I compare ESO fair values based on firm-reported inputs with ESO fair values based on benchmark inputs, estimated following authoritative guidance. On average, I find opportunism increases with recognition as compared with disclosure, and that it is associated with incentives to manage earnings. Despite the increase in opportunism, I find that accuracy does not decline for recognizers, and that accuracy differs across voluntary and mandatory recognition.

Keywords: Fair value; Earnings management; Recognition versus disclosure; Employee stock options (search for similar items in EconPapers)
JEL-codes: G28 M41 M42 (search for similar items in EconPapers)
Date: 2011
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Citations: View citations in EconPapers (27)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jaecon:v:51:y:2011:i:1:p:77-94

DOI: 10.1016/j.jacceco.2010.09.004

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