Table of Contents:

1 Introduction…………………………………………………………………………………. 9
1.1 Background………………………………………………………………………………. 9
1.2 Problem …………………………………………………………………………………. 10
1.3 Research Issue ………………………………………………………………………… 12
1.4 Purpose ………………………………………………………………………………….. 12
1.5 Delimitations ………………………………………………………………………….. 13
1.6 Thesis Outline…………………………………………………………………………. 14
2 Methodology ……………………………………………………………………………… 15
2.1 Research Approach ………………………………………………………………….. 15
2.2 Research Perspective………………………………………………………………… 16
2.3 Research Design ……………………………………………………………………… 16
2.4 Research Method …………………………………………………………………….. 17
2.5 Data Collection ……………………………………………………………………….. 17
2.6 Quality of the Research…………………………………………………………….. 19
3 Theory………………………………………………………………………………………. 21
3.1 The Concept of Stock-Based Compensation…………………………………. 21
3.2 Stock-Based Compensation Effect on Company Performance…………. 22
3.3 The Growth of Stock-Based Compensation………………………………….. 24
3.4 Stock-Based Compensation Plans – Expense or Not?…………………….. 25
3.5 Methods to Measure Stock-Based Compensation Expense……………… 27
3.6 Accounting for Stock-Based Compensation in the United States
Prior to SFAS 123……………………………………………………………………. 32
3.7 The History of SFAS 123 “Accounting for Stock-Based
Compensation” ……………………………………………………………………….. 32
3.8 The History of Accounting for Share-Based Compensation ………………
by IASB…………………………………………………………………………………. 33
3.9 Examination of FASB Statement No. 123 “Accounting for Stock-
Based Compensation” ………………………………………………………………. 34
3.10Examination of FASB Statement No. 148 “Accounting for Stock-
Based Compensation – Transition and Disclosure” ……………………….. 36
3.11Examination of the IASB Exposure Draft 2 “Share-Based
Payment” ……………………………………………………………………………….. 38
3.12Invitation to Comment “Accounting for Stock-Based Compensation:
A Comparison of FASB Statement No.123, Accounting for Stock-
Based Compensation and Its Related Interpretations, and IASB
Proposed IFRS Share-Based Payment” ……………………………………….. 40
4 Empirical Findings ……………………………………………………………………… 45
4.1 Review of Comment Letters Submitted to the ED for SFAS 123 …….. 45
4.2 Review of Comment Letters Submitted to the ED for SFAS 148 …….. 56
4.3 Review of Comment Letters Submitted on IASB Discussion Paper
on Share-Based Payments …………………………………………………………. 61
4.4 Review of Comment Letters Submitted on Invitation to Comment
“Accounting for Stock-Based Compensation: A Comparison of FASB
Statement No.123, Accounting for Stock-Based Compensation and Its
Related Interpretations, and IASB Proposed IFRS Share-Based
Payment” ……………………………………………………………………………….. 68
4.5 Overview of Company Reporting Practices………………………………….. 73
5 Analysis ……………………………………………………………………………………. 81
5.1 General ………………………………………………………………………………….. 81
5.2 Opinions on Stock-Based Compensation……………………………………… 82
6 Concluding Discussion ………………………………………………………………… 89
6.1 Conclusions ……………………………………………………………………………. 89
6.2 Suggestions for Further Research……………………………………………….. 91
7 List of References:………………………………………………………………………. 93