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The recently proposed rule by the Financial Accounting Standards Board FASB that requires companies to treat employee stock-option compensation as an expense on corporate income statements will reduce the reported income of firms, according to Todd Milbourn, a professor of finance at the Olin School of Business at Washington University in St.

The new rule, if finalized after a day comment period, will go into effect next year.

The proposed rule by the FASB is expected to significantly influence investor behavior. But Milbourn said that the ultimate effect of the proposed rule is somewhat uncertain.

Understanding the New Accounting Rules For Stock Options and Other Awards - FindLaw

The new FASB rule will essentially add yet another variant of Net Income to corporate financial statements, Milbourn said. Many analysts have predicted that the new FASB rule may also impact innovation and growth within firms that rely heavily on options to attract top talent, particularly technology-driven companies.

This would be unfortunate. However, in an efficient financial market, investors should not be wary of stock options when they are employed wisely, and the rules for expense stock options fasb firms will make money casino roulette this and continue to use them accordingly.

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Stock option expensing - Wikipedia

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