X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.

Never mind the conventional wisdom that Republican control of the White House and the House of Representatives should augur an era of business-friendly government. The time may be riper than you think for a little pendulum swinging when it comes to stock options.

Between the collapses of the stock market, tech sector and economy and, now, the Enron Corp. scandal, the public is becoming somewhat disenchanted with the so-called entrepreneurial wealth creators that it worshipped for much of the past decade. And savvy politicos haven’t missed the turning tides. Recently, stock options attracted the withering glare of Federal Reserve Chairman Alan Greenspan, who took the occasion of testifying before the House to wag a finger at the Financial Accounting Standards Board for its “unfortunate” 1994 ruling allowing firms to account for stock options with mere footnotes to financial statements, rather than take a direct hit to earnings. The practice not only caused management to focus almost exclusively on short-term earnings growth, he sighed, but also further pumped up an already inflated equities market. “We estimate that over the period 1995 to 2000, almost three full percentage points of the average annual gain in earnings resulted from the fact that stock options, rather than cash, was used as compensation amongst our major corporations,” he told the House Financial Services Committee on Feb. 27. “This undoubtedly had an effect on accelerating earnings.”

Complete your profile to continue reading and get FREE access to Treasury & Risk, part of your ALM digital membership.

Your access to unlimited Treasury & Risk content isn’t changing.
Once you are an ALM digital member, you’ll receive:

  • Critical Treasury & Risk information including in-depth analysis of treasury and finance best practices, case studies with corporate innovators, informative newsletters, educational webcasts and videos, and resources from industry leaders.
  • Exclusive discounts on ALM and Treasury & Risk events.
  • Access to other award-winning ALM websites including PropertyCasualty360.com and Law.com.

Already have an account?

Treasury & Risk

Join Treasury & Risk

Don’t miss crucial treasury and finance news along with in-depth analysis and insights you need to make informed treasury decisions. Join Treasury & Risk now!

  • Free unlimited access to Treasury & Risk including case studies with corporate innovators, informative newsletters, educational webcasts, and resources from industry leaders.
  • Exclusive discounts on ALM and Treasury & Risk events.
  • Access to other award-winning ALM publications including PropertyCasualty360.com and Law.com.

Already have an account? Sign In Now
Join Treasury & Risk

Copyright © 2021 ALM Media Properties, LLC. All Rights Reserved.