The Analysis Of Stock Option From The Perspectives Of Law And Accounting Principles

The research is focused on the challenges and implementation issues that hadbeen raised from current accounting standards in domestic and abroad, it consideredthe related government regulations and directions regarding employee stock optioncompensation plans that were exercised after the adjustment of the corporate law inthe year2005. The discussion and analysis were introduced from both law andaccounting point of views.From cooperate law perspective, the adjustment and development of Chinesecooperate law has built execution foundation for stock option plans tough there hasbeen still some restrictions of stock option plan from exercise viewpoint. Comparingthe concept of corporate law and accounting standards, the thesis has challenged thepurpose of capital system that had been selected from corporate law. In addition, thethesis had discussed the new source of stock to enlarge the scale of compensationplan implementation.From accounting perspective, the thesis discussed the company equity andcapital system, valuation issues of company compensation expense, agency issues,and personal gains with tax impact had also been discussed in the research paper.Comparative analysis, critical thinking for stock compensation theories indomestic and abroad had been adopted during the research period. The research hadalso quantified and figured out characteristics of Chinese local stock market.Although huge amount of stock option compensation plans had been announced andexercised in the open market, the effectiveness and reliability of the certain kind ofexercise plans had been questioned due to the basic market environment related to thelack of details in accounting standers and regulations.As a consequence, the Chinese stock option based compensation plans shouldincrease its reliability by improving the capital system which would result the growthof stock compensation base source, and in addition, the taxation policy leaning impacton compensation choices should also be developed. Furthermore, the Chineseaccounting standards should be more detailed on stock option cost valuation methods. Improving the effectiveness of disclosure, audit committee and independent boardmembers would be also applicable methodologies to construct a strong reliable stockmarket that enhanced stock price to correctly reflect the company market value, andthus the stock option could enrich company value.