The Research On The Accounting Recognition Of Executive Stock Options

Nowadays, there are two kinds of view about the accounting treatment of the executive stock options(ESO).The first is the expensing view, the second is distributing view. This paper focus mainly on why the distributing view is better than the expensing view, why the FASB chose the expensing view and how to regulate the accounting treatment of ESO when the ESO becomes popular in China.At first, the paper summarizes the accounting standards in the USA. Then, using the corporate theory to analyze the ESO and find the economic substance of ESO is that executive shares the claim to the firm's residue. Using the accounting theory to analyze the accounting attribute of the ESO and point out the expensing view does not conform to the definition of the accounting element. Using the corporate governance theory to analyze the theoretical foundation of the accounting model and point out that the accounting model based on the stockholder theory is the reason why the FASB insists on the expensing view. The paper thought the distributing view conforms to principle of the substance over form, so the paper prefers the distributing view to the expensing view. Finally, taking account of the ESO in China, the paper believes that the accounting standards in China should be improved. The accounting treatment about the ESO should be advanced gradually in the form of firstly disclosure, secondly disclosure and recognition (distributing) available(encourage recognition) and finally recognition.