Abstract

http://ssrn.com/abstract=1373938
 
 

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Does Accounting Regulation Enhance Corporate Governance? Evidence from the Disclosure of Share-Based Remuneration


Andrea Melis


University of Cagliari; Centre for Corporate Governance Research

Silvia Carta


University of Cagliari

April 6, 2009

Journal of Management and Governance, Forthcoming

Abstract:     
Accounting for stock options and share-based remuneration is a controversial issue. The purpose of this study is to explore the impact of the mandatory adoption of IFRS 2 on accounting for share-based remuneration by Italian listed companies. The requirements under this standard could have relevant implications for corporate governance as IFRS 2 is expected to reduce the information asymmetry that may exist between corporate insiders and outsiders regarding such remuneration. Empirical evidence confirms that overall disclosure in annual reports concerning the costs of remuneration plans has increased following the adoption of IFRS 2, although some cases of lack of disclosure have also been found. We find that this change in accounting regulation has contributed towards revealing the 'true' cost of share-based remuneration to minority shareholders and other investors, together with some evidence of creative accounting surrounding the substance over form principle.

Number of Pages in PDF File: 17

Keywords: accounting regulation, corporate governance, disclosure, IFRS 2, Italy, share-based remuneration, stock options

JEL Classification: G34, M41

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Date posted: July 30, 2010 ; Last revised: October 31, 2010

Suggested Citation

Melis, Andrea and Carta, Silvia, Does Accounting Regulation Enhance Corporate Governance? Evidence from the Disclosure of Share-Based Remuneration (April 6, 2009). Journal of Management and Governance, Forthcoming. Available at SSRN: http://ssrn.com/abstract=1373938

Contact Information

Andrea Melis (Contact Author)
University of Cagliari ( email )
c/o Facoltà di Economia
Viale S. Ignazio 17
Cagliari, 09123
Italy
+39-070-6753302 (Phone)
+39-070-6753321 (Fax)
HOME PAGE: http://people.unica.it/andreamelis
Centre for Corporate Governance Research
The Birmingham Business School
University of Birmingham
Edgbaston, Birmingham B15 2TT
United Kingdom
Silvia Carta
University of Cagliari ( email )
I-09123 Cagliari
Italy
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