Expensing stock-based payments: A material concern?

Chalmers, Keryn; Godfrey, Jayne M.

doi:10.1016/j.intaccaudtax.2005.08.004

Cited by 22 publications

(33 citation statements)

References 21 publications

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“…Managers had to consider renegotiating their employment contracts with their employers (Chalmers and Godfrey, 2005).…”

Section: Accounting Standards Board (Fasb) In the United States Of Ammentioning

confidence: 99%

“…However, since the implementation of IFRS 2, both equity-settled and cash-settled SBP transactions affect profit or loss and therefore earnings used in the calculation of EPS. Pre-IFRS 2 implementation studies conducted in the US and Australia (Street and Cereola, 2004;Chalmers and Godfrey, 2005) Melis and Carta (2010) and Shiwakoti and Rutherford (2010).…”

Section: Accounting Standards Board (Fasb) In the United States Of Ammentioning

confidence: 99%

“…Given the magnitude of the anticipated impact of expense recognition for non-US entities evident in the Street and Cereola (2004) (2004), Street and Cereola (2004) and Chalmers and Godfrey (2005)) on the SBP effect on EPS and other performance ratios focused on the period prior to the adoption of IFRS 2.…”

Section: Accounting Standards Board (Fasb) In the United States Of Ammentioning

confidence: 99%

“…Reporting Standards (IFRS) (Chalmers and Godfrey, 2005) and an assumption was made by Chalmers and Godfrey (2005) that Australian firms had had time to react to the thenimpending implementation of IFRS 2. Chalmers and Godfrey (2005) had to rely on forecasted future SBP expenses, limited to the top five executives, to determine the effect thereof on EPS.…”

Section: Pre-implementation Studies In the Us And Australiamentioning

confidence: 99%

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The effect of expensing share-based payments on basic earnings per share of South African listed companies

Pretorius

Villiers

2013

Meditari Accountancy Research

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Purpose -This study aims to investigate the post-implementation impact of expensing sharebased payment transactions on basic earnings per share. In recent years, IFRS 2 was one of the most opposed and controversial standards issued by the IASB.Design/methodology/approach -The sample relates to the period immediately after implementation (2006)(2007)(2008)(2009) and consists of the 531 firm-year observations where sharebased payments were present among Johannesburg Stock Exchange listed companies. The effect of share-based payments on basic earnings per share is assessed.Findings -The findings of this study show a statistically significant impact on basic earnings per share, but the results are more modest than suggested by prior studies. The number of companies reporting a share-based payment expense increased over the five-year period [2005][2006][2007][2008][2009].Originality/value -The introduction of IFRS 2 caused small but not necessarily immaterial changes to the income profile of companies. This is important for analysts and general users of financial information who need to be aware of these changes. The results also suggest that IFRS 2 did not merely cause accounting policy changes, but has impacted on the way sharebased payment transactions are used by companies.KEY WORDS: basic earnings per share; earnings per share; IFRS 2; listed companies; share-based payment expense; share-based payment transaction; South Africa 1

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“…Managers had to consider renegotiating their employment contracts with their employers (Chalmers and Godfrey, 2005).…”

Section: Accounting Standards Board (Fasb) In the United States Of Ammentioning

confidence: 99%

Section: Accounting Standards Board (Fasb) In the United States Of Ammentioning

confidence: 99%

Section: Accounting Standards Board (Fasb) In the United States Of Ammentioning

confidence: 99%

Section: Pre-implementation Studies In the Us And Australiamentioning

confidence: 99%

See 2 more Smart Citations

The effect of expensing share-based payments on basic earnings per share of South African listed companies

Pretorius

Villiers

2013

Meditari Accountancy Research

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“…Most firms, not quite surprisingly, would still use the intrinsic value approach, which biased the overall financial picture of companies (Hull & White, 2002). Chalmers & Godfrey (2005) estimated that the obligatory IFRS 2 adoption had adversely affected at least 20 % of firm's financial performance ratios. An example how stock option grants can impact financial position of a company can be AOL Warner, which in 2001 reported the operating profit of $700 million under the accounting rules effective at that time.…”

Section: Introductionmentioning

confidence: 99%

Fulfillment of IFRS 2 Disclosure Requirements by Companies Listed on the Prague Stock Exchange

Červený¹

2018

EFAJ

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Abstract:The aim of this paper is to assess the quality of share-based payments' disclosure in compliance with IFRS 2 by companies listed on the Prague Stock Exchange. The study shows how companies in the Czech market utilizing share-based payments meet the requirements given by IFRS 2 framework and in order to support the arguments, it compares the results with randomly selected companies from the German DAX index, which represents a well-developed market. The focus is on three key principles of disclosure, as defined by the IFRS 2. As we will demonstrate, Czech corporations do meet the regulatory minimum requirements, but they fail to utilize some of the advanced valuation methods and their reports are generally rather brief compared to their German counterparts.

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Does accounting regulation enhance corporate governance? Evidence from the disclosure of share-based remuneration

Melis

Carta

2009

J Manag Gov

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Accounting for stock options and share-based remuneration is a controversial issue. The purpose of this study is to explore the impact of the mandatory adoption of IFRS 2 on accounting for share-based remuneration by Italian listed\ud companies. The requirements under this standard could have relevant implications\ud for corporate governance as IFRS 2 is expected to reduce the information asymmetry\ud that may exist between corporate insiders and outsiders regarding such\ud remuneration. Empirical evidence confirms that overall disclosure in annual reports\ud concerning the costs of remuneration plans has increased following the adoption of\ud IFRS 2, although some cases of lack of disclosure have also been found. We find\ud that this change in accounting regulation has contributed towards revealing the‘true’ cost of share-based remuneration to minority shareholders and other investors, together with some evidence of creative accounting surrounding the substance over form principle

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Expensing stock-based payments: A material concern?

Cited by 22 publications

References 21 publications

The effect of expensing share-based payments on basic earnings per share of South African listed companies

The effect of expensing share-based payments on basic earnings per share of South African listed companies

Fulfillment of IFRS 2 Disclosure Requirements by Companies Listed on the Prague Stock Exchange

Does accounting regulation enhance corporate governance? Evidence from the disclosure of share-based remuneration

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