After the Stock Options Boom: Changes in Equity-Based Pay Following the Mandatory Adoption of IFRS 2

IF 2 Q2 BUSINESS, FINANCE

International Journal of Accounting Pub Date : 2021-05-18 DOI:10.1142/S1094406021500062

R. Gillenkirch, O. Korn, Alexander Merz

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Abstract

This paper investigates the economic consequences of the mandatory adoption of International Financial Reporting Standard 2 (hereafter, “IFRS 2”) on firms’ choices between alternative executive compensation instruments. With a unique, hand-collected dataset that contains design elements of stock option plans, we find that the adoption of IFRS 2 affects both the decision to keep or to give up stock options and the choice of alternative equity compensation instruments. In contrast to recent evidence from the United States, we find that the majority of firms replacing stock options by other equity instruments switched to performance shares, not to restricted stock. Our dataset allows us to relate firms’ reactions to IFRS 2 to the three major rationales explaining stock option compensation practice, namely, optimal contracting, managerial rent extraction, and perceived cost. Our results suggest that all three rationales contribute to explaining changes in compensation design because firms with sophisticated option plans tend to keep their options, whereas design decisions by firms abandoning options are related to a lack of shareholder power.

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股票期权繁荣之后:强制采用国际财务报告准则第2号后股权薪酬的变化

本文研究了强制采用《国际财务报告准则2》（以下简称“IFRS 2”）对企业在替代高管薪酬工具之间选择的经济后果。通过一个独特的手工收集的数据集，其中包含股票期权计划的设计元素，我们发现采用IFRS 2会影响保留或放弃股票期权的决定以及替代股权补偿工具的选择。与美国最近的证据相反，我们发现大多数用其他股权工具取代股票期权的公司都转向了业绩股，而不是限制性股票。我们的数据集使我们能够将公司对IFRS 2的反应与解释股票期权薪酬实践的三个主要理由联系起来，即最佳合同、管理租金提取和感知成本。我们的研究结果表明，这三个理由都有助于解释薪酬设计的变化，因为拥有复杂期权计划的公司倾向于保留他们的期权，而放弃期权的公司的设计决策与缺乏股东权力有关。

本文章由计算机程序翻译，如有差异，请以英文原文为准。

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来源期刊

International Journal of Accounting BUSINESS, FINANCE-

CiteScore

1.20

自引率

0.00%

发文量

期刊介绍： The aim of The International Journal of Accounting is to advance the academic and professional understanding of accounting theory, policies and practice from the international perspective and viewpoint. The Journal editorial recognizes that international accounting is influenced by a variety of forces, e.g., governmental, political and economic. Thus, the primary criterion for manuscript evaluation is the incremental contribution to international accounting literature and the forces that impact the field. The Journal aims at understanding the present and potential ability of accounting to aid in analyzing and interpreting international economic transactions and the economic consequences of such reporting. These transactions may be within a profit or non-profit environment. The Journal encourages a broad view of the origins and development of accounting with an emphasis on its functions in an increasingly interdependent global economy. The Journal also welcomes manuscripts that help explain current international accounting practices, with related theoretical justifications, and identify criticisms of current policies and practice. Other than occasional commissioned papers or special issues, all the manuscripts published in the Journal are selected by the editors after the normal double-blind refereeing process.