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Expensing of share-based payments and its impact on large UK companies

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  • Shiwakoti, Radha K.
  • Rutherford, Brian A.

Abstract

This paper investigates the impact of one of the most controversial and strongly-opposed accounting standards of recent years affecting UK companies, IFRS 2/FRS 20. The standard requires the expensing of share-based payments. The findings of the study show that the accounting standards IFRS 2/FRS 20 have had only a modest impact upon selected performance measures. Findings of this research are out of line with previous studies, which examined the position prior to the implementation of mandatory expensing and mainly cover other countries. Given the modest impact, a question arises as to why the standard was opposed so strongly. It could be concluded that the impact of the standard was overstated to fuel opposition.

Suggested Citation

  • Shiwakoti, Radha K. & Rutherford, Brian A., 2010. "Expensing of share-based payments and its impact on large UK companies," The British Accounting Review, Elsevier, vol. 42(4), pages 269-279.
    • Handle: RePEc:eee:bracre:v:42:y:2010:i:4:p:269-279
    DOI: 10.1016/j.bar.2010.07.007
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    References listed on IDEAS

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    1. Barber, Brad M. & Lyon, John D., 1996. "Detecting abnormal operating performance: The empirical power and specification of test statistics," Journal of Financial Economics, Elsevier, vol. 41(3), pages 359-399, July.
    2. Richard Schroeder & David A. Schauer, 2008. "SFAS No. 123R: the controversy and its economic consequences," Managerial Auditing Journal, Emerald Group Publishing, vol. 23(3), pages 295-306, March.
    3. Geoffrey Poitras, 2007. "Accounting standards for employee stock option disclosure," International Journal of Business Governance and Ethics, Inderscience Enterprises Ltd, vol. 3(4), pages 473-487.
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    Cited by:

    1. Alexander Merz, 2020. "Expensing performance-vested executive stock options: is there underreporting under IFRS 2?," Journal of Business Economics, Springer, vol. 90(3), pages 461-493, April.

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    More about this item

    Keywords

    Share-based payment; Expensing;

    JEL classification:

    • J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting
    • M52 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Compensation and Compensation Methods and Their Effects

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