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Department of Applied Finance and Actuarial Studies

Brian Chu Seminar

Research Seminars - business and economics
  • Topic: Enhancing the Financial Reporting of Performance Stock Grants : Fair Values and the Components of Value-Added Analysis
  • Speaker: Brian Chu, Lecturer in Actuarial Studies, Australian School of Business, University of New South Wales
  • Venue:E4A 623
  • When: 4th April, 2014, (Fri)
  • Time: 11am - 12pm (Morning Tea from 10.30am)

Over 70% of Australian, UK and US firms issue performance stocks to better align the executive's interest with shareholder value. At present, the financial reporting standards do not explicitly recognise the impact of changes in the grant value on reported profit. We suggest that a fair value accounting approach would be useful in accurately reporting the amount executives receive from these grants. We also introduce a components of value-added analysis to measure the executive's contribution to shareholder value creation. Using a combination of simulated and empirical cases, we show how fair value accounting better reflects the true costs borne by shareholders and the components of value-added analysis provide a guide to improve the alignment of interests.

View the full paper "Enhancing the Financial Reporting of Performance Stock Grants : Fair Values and the Components of Value-Added Analysis" (PDF)



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