The effects of SFAS-123R on corporate investment

This study examines the effects of mandatory expensing of stock options on corporate investment after the passage of SFAS-123R. First, we find an increase in corporate investment such as R&D investment and capital expenditure in the post-SFAS-123R period. Second, we find that stock-based compensation such as stock option compensation and restricted stock in the post-SFAS-123R period is positively related to investment. Our findings suggest that SFAS-123R discourages the opportunistic use of stock option compensation. The use of option compensation in the post-SFAS-123R era appears to encourage managers to pursue more long-term investment, which suggests that the SFAS-123R has had positive consequences.

This is an Accepted Manuscript of an article published by Taylor & Francis in Applied Economics Letters on 2019-07-22, available online: https://www.tandfonline.com/10.1080/13504851.2019.1646394.

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Work Title The effects of SFAS-123R on corporate investment
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Open Access
Creators
  1. Heeick Choi
  2. Hyung Tae (Ted) Kim
  3. Seung Won Lee
  4. Songtao Mo
Keyword
  1. SFAS-123R
  2. Corporate investment
  3. Stock options
  4. Stock-based compensation
License CC BY-NC 4.0 (Attribution-NonCommercial)
Work Type Article
Publisher
  1. Applied Economics Letters
Publication Date July 22, 2019
Publisher Identifier (DOI)
  1. https://doi.org/10.1080/13504851.2019.1646394
Deposited January 30, 2024

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Version 1
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  • Created
  • Added The_Effect_of_SFAS-123R_on_corporate_investment.pdf
  • Added Creator Seung Won Lee
  • Added Creator Heeick Choi
  • Added Creator Hyung Tae Kim
  • Added Creator Songtao Mo
  • Published
  • Updated Keyword Show Changes
    Keyword
    • SFAS-123R, Corporate investment, Stock options, Stock-based compensation
  • Updated Creator Seung Won Lee
  • Updated Creator Heeick Choi
  • Renamed Creator Hyung Tae (Ted) Kim Show Changes
    • Hyung Tae Kim
    • Hyung Tae (Ted) Kim
  • Updated