Legal, economic and psychological issues of accounting for employee stock options

Michael Nwogugu (New York City, New York, USA)

Managerial Auditing Journal

ISSN: 0268-6902

Publication date: 1 December 2004


This paper analyzes economic, legal, behavioral and public policy issues pertaining to the accounting for employee stock options. The paper explains why employee stock options (ESOs) are superior to other forms of incentive compensation, why ESOs in their present form are inefficient and why particular accounting, legal and tax treatments will provide the optimal results for the economy, the government, management/employees and shareholders. The issues discussed in this article are relevant in ESO accounting, regulation of ESOs, incentive compensation, human resources analysis, tax policy, corporate governance, fraud, valuation of companies, derivatives regulation, behavioral analysis of law/rules, portfolio management and management strategy.



Nwogugu, M. (2004), "Legal, economic and psychological issues of accounting for employee stock options", Managerial Auditing Journal, Vol. 19 No. 9, pp. 1079-1118.

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Copyright © 2004, Emerald Group Publishing Limited

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