ESO Accounting: Emerging Issues and Trends
THE ICFAI UNIVERSITY PRESS ON ACCOUNTING AND ITS APPLICATIONS, pp. 113-129, L. Venu, ed., ICFAI University Press, 2009
Posted: 2 Apr 2010 Last revised: 11 Nov 2011
There are 3 versions of this paper
ESO Accounting: Emerging Issues and Trends
ESO Accounting: Emerging Issues and Trends
ESO Accounting: Emerging Issues and Trends
Date Written: March 26, 2010
Abstract
This article describes employee stock option mechanism and underlines the rationale for ESO grants. It also explains how ESOs differ from ordinary call options. In recent years, accounting scandals (e.g., Enron, Tyco and WorldCom) created an environment that demanded more transparent and higher quality financial reporting. Accounting for Employee Stock Options (ESOs) has been one of the most controversial topics in financial reporting during the last decade. Many employees receive equity compensation as a supplement to their salaries. Traditionally, this compensation comes in the form of ESO grants. Subsequently ESO grants and accounting methods came under increased scrutiny by regulators.
Keywords: ESO, Stock Options, Accounting
JEL Classification: M41, G12, G24
Suggested Citation: Suggested Citation