Question
Expensing of employee stock options (ESOs) is now a requirement in financial reporting both under U.S. GAAP and IFRS. However, management, especially in the United
Expensing of employee stock options (ESOs) is now a requirement in financial reporting both under U.S. GAAP and IFRS. However, management, especially in the United States, successfully resisted expensing for many years before the expensing rules were finally adopted. Even now, accounting for ESOs remain a controversial topic.
question:
b. Researchers have observed that managers compensated by ESOs tend to release bad news prior to ESO grant dates and good news prior to ESO exercise dates. Discuss the incentives of managers to choose this timing for release of bad and good news.
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