Accounting for Stock Options.

The article presents information on a method for expensing stock options implemented by the Financial Accounting Standards Board in the U.S. in November 2005, and suggests an alternative options expense valuation method, the Bulow-Shoven approach. The rule would have slashed reported earnings of the Standard & Poor's 500 by 8.6 and 7.4 percent; the effect in the bubble years would have been more than twice as large. Under the Bulow-Shoven proposal, all vested options would be expensed on a quarter-by-quarter basis.