Financial Accounting Standards Board regulatory update

A study conducted by DRI/McGraw-Hill and sponsored by the Biotechnology Industry Organization and the National Venture Capital Association concluded that biotech companies will be seriously hurt by a proposed FASB rule that would force companies to list the value of employee stock options as an expense.

Under the FASB proposal, options would be valued by using one of the accepted pricing models for market-traded options, and then modifying the model to account for the fact that employee stock options are not tradable. The study said there is no way to reliably measure fair value for non-tradable options, and concluded that the resulting values produced by the FASB model are overstated. ...