The Research On Accounting For Stock Options

With the establishment of modern enterprise system, the separating between the ownership and the management right leads to principal-agent issues, which has become an obstacle of the business development, stock option is considered as the long-term effective incentive mechanism to resolve principal-agent issues. However, stock option system lies in the preliminary and trying out phases because of our current policy conditions, so there are no relevant regulations to comply with. Learning other countries' advanced experiences, this paper explores stock option accounting thoroughly, and puts forward some suggestions to policy making based on fact.This paper is divided into two parts. Using standard method based on fundamental accounting theories and concepts, in the fist part we begin with the definition and theory foundation of stock option, then make a thoroughly discussion for the recognition, measurement and report of stock option in vertical order of accounting transact. In the last half, focusing on case study, we compare the performance of those listed companies of petrochemical industry in the Stock Exchange of Shanghai, Shenzhen and Hongkong which have carried out stock option system with which have not, analyzing the effectiveness of stock incentive system and its effect on the basis of stock option theory. In this part we also analyze the current accounting status of stock option system, then lead to a coexist situation of intrinsic value measurement and fair value measurement on present trying out phases, the reasonable choice of stock option accounting standard is to recognize the reward cost in the profit and loss account and to apply fair value measurement until it is prevalent in our country, which is one of the innovations in this paper. At the end, this paper discusses macroscopic environment of carrying out stock option and give some suggestions based on both theory and practice of stock option.