Chapter

New Data for Answering Old Questions Regarding Employee Stock Options

Kevin F. Hallock and Craig A. Olson

in Labor in the New Economy

Published by University of Chicago Press

Published in print November 2010 | ISBN: 9780226001432
Published online February 2013 | e-ISBN: 9780226001463 | DOI: http://dx.doi.org/10.7208/chicago/9780226001463.003.0005
New Data for Answering Old Questions Regarding Employee Stock Options

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This chapter aims to provide a review and update on some important questions in employee stock options. Several reasons are mentioned as to why learning about stock options is important for firms, employees, and public policymakers. The past twenty years are stated to have seen a dramatic growth in the use of stock options for senior-level executives, and, beginning in the mid-1990s, substantial growth in the use of options for nonexecutive employees that was only partially dampened by the market adjustment in 2001. Another reason is that it may provide insight into the widespread debate about the appropriate method of estimating the cost and value of options to firms. There are many strongly held opinions and new Financial Accounting Standards Board regulations on how firms should expense options, although there is no consensus on a theoretical or empirical method for estimating employee stock option costs to the firm.

Keywords: stock options; employees; financial accounting standards; costs; value

Chapter.  16358 words.  Illustrated.

Subjects: Microeconomics

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