__smbhome.uscs.susx.ac.uk_tb263_Desktop_Does Accounting Treatment of Share Based Payments Impact Performance Measure.pdf (1.32 MB)
Does accounting treatment of share-based payments impact performance measures for banks?
journal contribution
posted on 2023-06-09, 12:39 authored by Alaa Alhaj Ismail, Sami AdwanSami Adwan, John StittleThis paper identifies, evaluates and analyses the resulting impact of mandatory expensing of share-based compensation (SBC) under IFRS2/FASB123R on a set of widely used performance measures in the EU and US banking industry. The paper shows that the accounting treatment of SBC schemes, following the mandatory adoption of IFRS2/FAS123R, has a statistically significant negative impact on the selected performance measures over the period 2004–11. The impact also seems to be material, yet modest, for US banks and only for large and high-growth EU banks, indicating that earlier public concerns and criticisms of the implementation of IFRS2/FAS123R are largely unsubstantiated. The findings also show that banks continue to use SBC, but there is a reduction, albeit insignificant, in the recognised SBC expense over the period 2009–11. That is, earlier public concerns that firms would curtail employing SBC in their employees’ compensation schemes to avoid the effect of SBC expense recognition on their financial ratios came to light after the first option life-cycle in the post-adoption period was over. The findings also show a marked movement towards using cash-settled-based payments, possibly due to their manipulative accounting treatment, a potentially interesting issue for related accounting research and accounting standard setters.
History
Publication status
- Published
File Version
- Accepted version
Journal
Australian Accounting ReviewISSN
1035-6908Publisher
WileyExternal DOI
Department affiliated with
- Accounting and Finance Publications
Full text available
- Yes
Peer reviewed?
- Yes
Legacy Posted Date
2018-03-27First Open Access (FOA) Date
2020-07-05First Compliant Deposit (FCD) Date
2018-08-15Usage metrics
Categories
No categories selectedKeywords
Licence
Exports
RefWorks
BibTeX
Ref. manager
Endnote
DataCite
NLM
DC