Greenspan said their use had had ‘perverse effects’ on financial accounting which had to be rectified, particularly in the wake of the Enron collapse.
There is no rule for accounting for stock options anywhere in the world. US standard setters hit a brick wall in the 1990s when they tried to force companies to account for granting share options in their financial reports.
Research by the Federal Reserve has calculated that the substitution of options for traditional cash salaries and bonuses added around 2.5% to company earnings at the US?s largest companies from 1995 to 2000.
Greenspan said: ‘The current accounting for options has created some perverse effects on the quality of corporate disclosures that, arguably, is further complicating the evaluation of earnings and hence diminishing the effectiveness of published income statements in supporting good corporate governance,’ according to reports in national and international press.
Does Darwin's theory apply to taxation? Colin ponders...
The EC has been instructed to draft a European Union (EU) directive authorising an EU financial transaction tax, which would apply to ten of the EU’s 28 member states
Accountancy watchdog the FRC has dropped its investigation into the former chief financial officer of Tesco, nearly two years after the supermarket was engulfed in an accounting scandal
Colin imagines how Apple's logo might change in the wake of the EC's ruling over its Irish tax arrangements