TY - JOUR
T1 - Evidence on differences between recognition and disclosure
T2 - A comparison of inputs to estimate fair values of employee stock options
AU - Choudhary, Preeti
N1 - Funding Information:
This paper is from my dissertation “Effects of Recognition versus Disclosure on the Structure and Financial Reporting of Share Based Payments.” I acknowledge helpful comments from: Bill Baber, Anne Beatty (referee), Melissa Lewis, DJ Nanda, Per Olsson, Lee Pinkowitz, Karthik Ramanna, Katherine Schipper, Jason Schloetzer, Mary Sullivan, Mohan Venkatachalam, Ross Watts (editor), and workshop participants at Columbia University, Emory University, George Mason University, George Washington University, Georgetown University, Massachusetts Institute of Technology, University of Chicago, the 2007 Excellence in Financial Reporting Conference, and 2008 Financial Accounting and Reporting Section for their helpful comments. I also acknowledge financial support from Georgetown University , Duke University , and the Global Capital Markets Research Group at Duke University .
PY - 2011/2
Y1 - 2011/2
N2 - 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.
AB - 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.
KW - Earnings management
KW - Employee stock options
KW - Fair value
KW - Recognition versus disclosure
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U2 - 10.1016/j.jacceco.2010.09.004
DO - 10.1016/j.jacceco.2010.09.004
M3 - Article
AN - SCOPUS:79951513845
VL - 51
SP - 77
EP - 94
JO - Journal of Accounting and Economics
JF - Journal of Accounting and Economics
SN - 0165-4101
IS - 1-2
ER -