The valuation implications of employee stock option accounting for profitable computer software firms

• 成果类型: Article
• 署名作者: Bell, TB; Landsman, WR; Miller, BL; Yeh, S
• 署名单位: University of North Carolina; University of North Carolina Chapel Hill; University of California System; University of California Los Angeles; National Taiwan University
• 刊物名称: ACCOUNTING REVIEW
• ISSN/ISSBN: 0001-4826
• DOI: 10.2308/accr.2002.77.4.971
• 发表日期: 2002
• 页码: 971-996
• 关键词: value relevance

摘要

We use the Ohlson (1995, 1999) and Feltham and Ohlson (1999) valuation models to investigate the market's perception of the economic effect of employee stock options (ESOs) on firm value for a sample of 85 profitable computer software companies. Our results suggest that the market appears to value these firms' ESO expense not as an expense but as an intangible asset (even after controlling for the endogeneity bias arising from the mechanical relation between ESOs and the underlying stock prices). However, we also find a conflict between: (1) the positive manner in which investors appear to value ESO expense, and (2) the negative relation between current ESO expense and future abnormal earnings. This conflict not only could be an artifact of the restrictiveness of the abnormal earnings forecasting equation we estimate, but it also calls into question whether investors assess correctly the effect of ESOs on profitable software firm value.