In our thesis we are more biased towards the

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Unformatted text preview: meaning in texts, symbols and experiences. As opposed to positivism, it is more qualitative and is based on interpreting reality through people’s thoughts, motives and goals (Patel & Davidsson, 1994). In our thesis, we are more biased towards the hermeneutic approach. We conducted research that was based on our interpretations of the phenomenon we are studying. We studied the rules of IASB and FASB relating to stock option plans. Further we looked into whether companies expense stock options or not in their financial statements. The study of Comment Letters gave us an overview of companies’ viewpoint on the treatment of stock option plans. 2.3 Research Design There are the three main ways to form a theory which are: inductive, deductive and abduction. Empirical research uses induction. The inductive approach is a formulation of general theories from specific observations, as opposed to the deductive approach, which is the derivation of a new logical truth from existing facts (Melville & Goddard, 1996). The deductive approach can be described as when a theory concerning the chosen subject exists and a hypothesis is formed from this former theory. The research examines whether the existing theories are combined with reality by making comparisons to these existing theories (Kam, 1990). In the i nductive a pproach t he r esearch f ollows e arlier 16 explorations. The researcher is primarily conducting observations of the reality. From this, a conclusion is drawn, and a theory is formulated. In the a bduction approach the researcher uses a combination of both, the inductive and the deductive approaches, and from this creates an analysis of the empirical findings, together with previous theories (Alvesson & Sköldberg, 1994). In our opinion, our thesis is a combination of both the deductive and the inductive approaches. Having our own fundamental knowledge about the phenomenon, we started by gathering information and trying to condense it into a brief summary format. Further, we established a link between the objectives of our research and the findings we derived from the collected data. On the other hand, we can say we tested the existing theory as we tried to look into the ongoing movement toward accounting treatment for stock options. 2.4 Research Method Research can be conducted using quantitative or qualitative methods or a combination of both. The most important difference between these methods is that the quantitative method reverses the information received into numbers and from these results, a statistical analysis is performed (Holme & Solvang, 1997). The qualitative method penetrates every observation in a deeper way, focusing on variables that are harder to classify and quantify. The main purpose of qualitative research is to obtain a more profound knowledge than the fragmented information generated by quantitative methods. In a qualitative approach i t i s t he r esearcher’s u nderstanding o r i nterpretation o f t he information that is vital. Qualitative data is often suited for research projects that aim to understand or find a specific pattern within the investigated area (Holme & Solvang, 1997). Our study applies the qualitative method as we aim to obtain a deeper understanding of the study object and do not try to prove the credibility of our conclusions using quantitative methods or statistical tools. The data that are gathered, analyzed and interpreted cannot be meaningfully expressed in figures. 2.5 Data Collection Collecting data for the research is of paramount importance to the relevance of the outcome of the problem solving. A distinction is made between two 17 different types of data, namely primary and secondary data. Primary data is information collected and used for the first time, usually through direct examination, whereas secondary data consists of information already available, i.e. it has been collected or produced by a third party and perhaps for a different purpose (Eriksson & Wiedersheim-Paul, 1999). Secondary data can be divided into two sub groups, internal and external. Internal secondary data are available within the company/organization and external secondary data are provided by sources outside the company/organization. Relevant research data can be obtained from a variety of sources. (Lekvall & Wahlbin, 1993) Our study is based on secondary data. The material we read included books, articles, annual reports, Comment Letters and information provided on IASB, FASB and other websites. As our study involves an analysis of Comment Letters, it is important for the reader to understand the IASB and FASB rule-making system (called Due Process) and the role the Comment Letters play in that process. FASB and IASB systems of Due Process provide the opportunity for interested parties to express their views on the proposed accounting rules. The purpose of the Due Process is to carefully weigh the views of the constituents, so that the standards meet their needs. The first step in the Due Process is selecting the issue on the agenda. The second step is issuing a Discussion Memoranda/P...
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