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Unformatted text preview: rules. As far as IASB Exposure Draft “Sharebased Payment” is concerned, we will analyse the Comment Letters submitted on the Discussion Paper, which preceded the Exposure Draft. Only a limited number of Comment Letters will be analysed due to both, the high cost of purchasing all of the available Comment Letters and the limited time frame. 13 1.6 Thesis Outline Chapter 2: In this chapter we describe the research approach we used and the methods applied to collect and process the theoretical and empirical findings. Finally, we assess the quality of our research. Chapter 3: In this chapter we examine the concept of stock-based compensation, its effect on company performance and the existing FASB and IASB rules and regulations governing employee stock-based compensation plans. Further, we discuss whether a stock-based compensation plan results in an expense to a company or not. This chapter also deals with the problems and difficulties of measuring the expense and recognising the timing of the expense. Chapter 4: This chapter covers the empirical evidence we collected in the course of our work. We review the Comment Letters submitted by various companies with regard to FASB and IASB issued standards and Exposure Draft concerning accounting for stock-based compensation plans. Further, we describe the ways in which a number of companies reflect the stock-based compensation expense in their financial statements. Chapter 5: In chapter 5 we analyse the results of the study and present our reflections. Chapter 6: Chapter 6 contains the conclusions of our study and the conclusion to our research question. In this chapter we also give suggestions for further possible research. 14 2 Methodology In this chapter various methodological approaches that can be used when conducting research activities are discussed. We also explain which methods we have chosen and why. 2.1 Research Approach The choice of research approach depends on the degree of precision by which the original research question can be formulated, and how much knowledge exists in the area of the chosen subject. Patel & Davidsson (1994) state that research approaches can have three characteristics as explained below. When information is insufficient, the study is exploratory. The main purpose with exploratory studies is to collect as much knowledge about a study problem area as possible. This means that the problem is analysed from a number of different points of view. A wealth of ideas and creativity are important elements in explorative studies because these often aim at attaining knowledge that can lay the foundation for further studies (Patel & Davidson, 1994). The descriptive approach is best suited to investigations where there already is knowledge. I n a d escriptive s tudy, o nly t he e ssential a spects o f t he phenomenon are looked upon. The descriptions of these aspects are detailed and fundamental (Patel & Davidson, 1994). The hypothesis testing approach is used where information is extensive enough to form new theories. The researcher collects and makes hypotheses that will be tested in the empirical world and which will result in either acceptance or rejection (Patel & Davidson, 1994). In our thesis we used both exploratory and descriptive approaches. We collected as much data as possible about the study object, using various sources of information. Namely, we read a number of articles and other sources related to stock-based compensation plans and accounting for them. Moreover, we analyzed selected Comment Letters, which present the opinion of the business community on the subject of accounting for stock-based compensation. This data collection provided us with an extensive background on a variety of views on the subject of our research. The descriptive approach is used in our study of the existing and proposed rules regarding the accounting for stock option plans and for how the companies account for stock-based compensation plans in their financial statements. 15 2.2 Research Perspective There are two major perspectives that can be applied to scientific research, namely the positivistic approach and the hermeneutic approach (Patel & Davidson, 1994). The positivistic approach is based on experiments, quantitative measurements and logical reasoning. It is based on scientific rationality. It should be possible to e mpirically t est t he k nowledge i n o rder f or i t t o b e m eaningful. Measurements shall replace judgments and estimations; explanations shall come from a cause-effect relation. The positivistic approach is based to a large extent on measurement of, and logical reasoning about, reality (Patel & Davidsson, 1994). In the hermeneutic approach, the researcher approaches the study object from his/her own understanding. The researcher uses his/her own knowledge, thoughts, impressions and feelings in order to understand the study object. These attributes are an asset for the researcher and not an obstacle. Under the hermeneutic approach, the researcher tries to see the whole picture in a research problem. Hermeneutics is about interpreting the...
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This document was uploaded on 10/31/2013.

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