<span>Stock-based compensation plans are often used to companies as a method of providing incentive compensation to top executives. In this study we investigate the market response to the announcement and subsequent withdrawal of the FASB stock-based compensation project. Our findings suggest that investors expected the reduction in uncertainty resulting from expensing stock option costs to enhance firm value and were disappointed when the FASB withdrew the project.</span>

This paper investigates the association of stock prices and cash flows, using both the traditional cash flow definition and the SFAS 95 definition. The study finds that the traditional cash flow measure is more highly correlated with stock price changes for large firms than is the SFAS 95 measure and that neither definition of cash flow is significantly correlated with stock price changes for the small firm sample