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dc.contributor.advisor Schipper, Katherine en_US
dc.contributor.author Choudhary, Preeti en_US
dc.date.accessioned 2008-08-01T12:53:19Z
dc.date.available 2011-07-26T04:30:03Z
dc.date.issued 2008-04-21 en_US
dc.identifier.uri http://hdl.handle.net/10161/663
dc.description Dissertation en_US
dc.description.abstract <p>I examine whether financial statement preparers (managers and auditors) treat recognized versus disclosed fair value of option compensation differently. Recognition refers to items that appear on the face of financial statements and that are included in subtotal figures that appear in the summary accounts; disclosure refers to items that appear in words and amounts in only the financial statement footnotes. I find that fair value recognition of option compensation is likely to have a significant impact on net income. Firms in my sample granted options amounting to a median fair value of 7% of profits in 1996 and 11% of profits in 2004. I compare the terms of option grants and the properties of fair value estimation under a disclosure reporting regime to terms and properties under a recognition regime. Under a fair value recognition regime, I find firms reduce/eliminate option grants across all levels of employees, reduce the statutory length of options, and substitute restricted stock and bonuses for option compensation. The fair value reduction in option grants is on average 9% (0.4%) of absolute net income. In contrast, under a fair value disclosure regime, option compensation was not reduced. I also find that firms increase the bias in three inputs to fair value option estimation: volatility, dividend, and interest. This increase amounts to 4%, 2%, and 0.3% of fair value cost. Mandatory recognition firms also display increased dividend and interest input accuracy. Combined, these results suggest that financial statements reflect differences in behavior between recognition and disclosure reporting regimes, such that both real actions and fair value estimation are used to reduce recognized values.</p> en_US
dc.format.extent 514661 bytes
dc.format.mimetype application/pdf
dc.language.iso en_US
dc.subject Business Administration, Accounting en_US
dc.subject Business Administration, Accounting en_US
dc.subject recognition en_US
dc.subject disclosure en_US
dc.subject employee stock options en_US
dc.subject FAS en_US
dc.subject FAS en_US
dc.subject R en_US
dc.subject fair value en_US
dc.title Effects of Recognition versus Disclosure on the Structure and Financial Reporting of Share Based Payments en_US
dc.type Dissertation en_US
dc.department Business Administration en_US
duke.embargo.months 24 en_US

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