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What have we learned from SFAS 123r and IFRS 2? A review of existing evidence and future research suggestions

Alexander Merz (Chair of Finance, University of Goettingen, Platz der Göttinger Sieben 3, 37073 Göttingen, Germany) *

Journal of Accounting Literature

ISSN: 0737-4607

Article publication date: 9 June 2017

Issue publication date: 30 June 2017

47

Abstract

The fundamental change in accounting rules for equity-based compensation (EBC) instituted by SFAS 123, SFAS 123r, and IFRS 2 has allowed for new insights related to a variety of research questions. This paper discusses the empirical evidence generated in the wake of the new regulation and categorizes it into two broad streams. The first stream encompasses research on the changed use of EBC and the incentives provided. The second stream addresses how firms account for EBC, including the underreporting phenomenon and how it was affected by the mandatory recognition of EBC expenses. I discuss where research delivers unanimous findings versus contradictory results. Using these insights, I make recommendations for further research opportunities in the area of EBC.

Keywords

Citation

Merz, A. (2017), "What have we learned from SFAS 123r and IFRS 2? A review of existing evidence and future research suggestions", Journal of Accounting Literature, Vol. 38 No. 1, pp. 14-33. https://doi.org/10.1016/j.acclit.2017.06.001

Publisher

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Emerald Publishing Limited

Copyright © 2017, Emerald Publishing Limited

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