Iciorgfasbstreamlinecom comment letters are the

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: aper. Further, an Exposure Draft is issued, which is followed by an accounting standard. All interested parties are allowed to express their opinion by submitting Comment Letters on Discussion Memoranda/Paper and Exposure Drafts (www.ici.org/fasb_streamline_com). Comment Letters are the primary means by which constituents can communicate with FASB and IASB on their proposals. They are the source of feedback on the conceptual soundness, technical accuracy and appropriateness of the proposed rules. In addition, comments from interested parties are particularly helpful in understanding whether the information provided in proposed rules is useful in fulfilling the needs of those who eventually use them (www.gasb.or/dueprocess-cl). We made a selection of Comment Letters from different companies and organisations. There were more than 700 Comment Letters submitted on the Exposure Draft to SFAS 123 (www.fei.org/advocacy/download/StockOptionswhitepaper.pdf). Due to the high cost and shortage of time it was not possible to study all the letters; therefore we have chosen ten of them. The total number of Comment Letters submitted on SFAS 148 was 77. We selected Comment Letters of seven companies and two professional organizations for our study. IASB Discussion Paper (which preceded ED 2) received 311 responses (www.iasb.org.uk/cmt/001.asp). Since it was not feasible to examine all the 18 submitted letters, we have chosen ten Comment Letters. The total number of the Comment Letters on the Invitation to Comment is not known yet since the response period is still ongoing. The choice of companies was not totally random, but based on our intention to consider the opinions of companies transacting in major industries, namely in financial services and management, software, telecommunications, steel, petroleum, automotive and beverage. The selected companies are the leaders in their industries. We chose ten companies, from those whose Comment Letters we reviewed, for specific investigation of how they account for stock-based compensation expense. W e e xcluded a ssociations o f c om panies a nd p rofessional organizations as they represent the views of a group of companies but do not use stock-based compensation expense themselves. 2.6 Quality of the Research To be able to achieve a high level of credibility for the conclusions presented in this thesis, it is important to demonstrate that the research was designed and conducted in such a way that it accurately identifies and describes the phenomenon that was investigated. In order to do this, it is important to describe issues concerning the research project’s validity and reliability (Ryan, et al., 1992). Validity is one element of science research which deals with the issue of whether the research actually measures the things it aims to measure, and that nothing irrelevant affects the result. According to Lekvall and Wahlbin (1993), validity can be divided into constructive, internal and external validity. Constructive validity assesses whether there is a correct relationship between theories and empirical findings. Internal validity approximates the truth about a presumption regarding cause-effect or causal relationships. Thus, internal validity is only relevant in studies that try to establish a causal relationship. External validity considers whether the findings can be generalized and provides conclusions regarding other situations than the specific case studied. Reliability considers the quality of measurement. It clarifies to what extent the findings can be replicated when using the same research method, i.e. if the measurement tool will generate the same or similar results if another researcher who follows the same procedure replicates it (Lekvall &Wahlbin, 1993). To ensure the validity of our thesis we tried to use as many sources of information as possible and to link them to each other. We carefully studied the literature, articles and accounting standards available. We presented a thorough explanation of the rules governing the accounting for stock option plans and the 19 application in practice. Based on that information, we established the main issues which raise concerns of business enterprises regarding accounting for stock-based compensation expense. It is difficult to evaluate the reliability of our study as we a used qualitative research method. However, we can say reliability of our study is supported by the examination of the underlying standards, Comment Letters that were available, and annual reports. Of course, the conclusions we make, in Chapter 6, are necessarily based on the limited number of companies under study. We have selected a broad-based group of companies, from different sectors of business community, in order to achieve a representative sample. Our conclusions are based only on this sample collection. 20 3 Theory In this chapter 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 are discuss...
View Full Document

This document was uploaded on 10/31/2013.

Ask a homework question - tutors are online