A Study Of The Accounting Regarding Stock-Based Payment Methods

Abstract

A statistical analysis of a subset of publicly listed firms' stock-based compensation program data is presented here. The impact of FASB and IFRS 2 on financial measures and reported costs is being evaluated by researchers. The differences in earnings per share (EPS), the overall fair value of the stock options awarded, and the reported compensation expenditures are important factors to evaluate. The study's authors use regression analysis to investigate the connection between the various fair value determination techniques and the stated variation in compensation expenditure. Based on the research, companies that used option pricing procedures like Black-Scholes to calculate their worth reported significantly higher expenditures. A company's apparent profitability might be affected by an increase in compensation expenditures, as there is a statistically significant negative link between EPS and stock-based compensation expenditures. The study also shows that investor responses, as measured by stock price volatility, relate to the degree of transparency about stock-based remuneration. Stock prices tend to level out when investors feel more secure because of more transparent regulations, according to the research. The significance of having strong valuation methodology and clear reporting standards for accounting for stock-based remuneration is highlighted by the findings of this study. Accounting rules and the confidence of stakeholders in financial reporting might both benefit from more knowledge.