Biotech Valuation Message Board

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Biotech / Medical : Biotech Valuation

CRSP 53.47

+0.3%

Nov 28 9:30 AM EST

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To: Icebrg who wrote (8294)	5/8/2003 8:59:26 AM
From: Biomaven	of 52153

a radical approach Not so radical - this is the accounting treatment (so-called variable accounting) that you get nowadays if you reprice options (other than in a six-months-and-a-day scenario). Companies hate it because it means you have unpredictable earnings swings every quarter depending on your stock price (you get a big earnings hit if your stock goes up). The unfortunate consequence of expensing options is that more and more companies are simply awarding smaller amounts of restricted stock instead - people still haven't caught on that this is economically equivalent to awarding options with a zero strike price. At this point I judge that expensing options is going to happen - it's just a question of timing. Most likely it will happen in conjunction with a new acronym that most of you haven't heard before - the IASB, or International Accounting Standards Board. Peter

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