Small Business Resources, Business Advice and Forms from AllBusiness.com

Markets; Study: expensing doesn't hurt stock.

By Heffes, Ellen M.
Publication: Financial Executive
Date: Tuesday, June 1 2004

Just as the Financial Accounting Standards Board (FASB) issued its exposure draft on stock option expensing, Towers Perrin released its findings of an event study that shows that a company's decision to expense stock options has no impact on stock price. The Towers Perrin study includes 335

companies that have elected to reflect option expense on their income statements. Tracking share prices on the day of company declarations, and during the 150 trading days before and 150 trading days after, share performance remained the same, on average, as the 900 companies comprising S & P's 500 and Mid-Cap 400 indexes.

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