As for the debate over whether employee stock options should be expensed in the income statement, much of the concern centers on whether the negative earnings impact would drive stock prices lower. From a capital market perspective, the answer is clear: as long as investors have sufficient information on the amount, terms, and conditions of the options granted, new expensing rules will not drive down share prices. In fact, according to a recent study, companies that voluntarily began expensing their employee options before it became mandatory experienced positive share-price reactions when
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