The effects of SFAS-123R on corporate investment
Title
The effects of SFAS-123R on corporate investment
Description
This study examines the effects of mandatory expensing of stock options on corporate investment after the passage of SFAS-123R. First, we find an increase in corporate investment such as R&D investment and capital expenditure in the post-SFAS-123R period. Second, we find that stock-based compensation such as stock option compensation and restricted stock in the post-SFAS-123R period is positively related to investment. Our findings suggest that SFAS-123R discourages the opportunistic use of stock option compensation. The use of option compensation in the post-SFAS-123R era appears to encourage managers to pursue more long-term investment, which suggests that the SFAS-123R has had positive consequences.
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Choi, H., Kim, H. T., Lee, S. W., & Mo, S. (2020). The effects of SFAS-123R on corporate investment. Applied Economics Letters, 27(10), 803–809. https://doi.org/10.1080/13504851.2019.1646394
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“The effects of SFAS-123R on corporate investment,” Outstanding Faculty Publications, accessed October 5, 2024, https://facpub.library.fresnostate.edu.fsdigitalhumanities.com/items/show/211.