The Value Relevance of Employee Stock Option Capitalization

• Main Authors: Kuan-chien Yang, 楊冠謙
• Other Authors: Ming-che Lu
• Format: Others
• Language: zh-TW
• Published: 2009
• Online Access: http://ndltd.ncl.edu.tw/handle/33279663422835012986

碩士 === 朝陽科技大學 === 會計所 === 97 === Prior researches show that issuing employee stock options can improve future profitability (Hanlon et al. 2003; Lu 2006). Since issuing employee stock options can be treated as a means of developing human capitals, the fair values of options should be recognized as assets on issuing date and amortized in subsequent years. This study explores the relationship between employee stock options and earnings of subsequent years, and estimates the rate of amortization for each year. After obtaining the employee stock options assets, I further examine the value relevance for such an item of assets. This empirical study covers the period from 2001 to 2007. Research sample includes the firms listed in TSE or OTC markets and ever issued employee stock options. Empirical results reveal that the rates of amortization from current year to subsequent five years are 11.45%, 15.35%, 20.58%, 14.56%, 22.45%, and 15.60% in turn. After controlling for other assets and liabilities, the employee stock options assets are positively associated with market value significantly, indicating that the employee stock options capitalization possesses incremental information for investors. The empirical results are robust for different preset durations of options in computing fair values, distinct market valuation models, as well as year effect.