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Announcement of Option Expensing Has No Impact on Share Price, Towers Perrin Study Finds; Study Examines Share Performance of Over 100 Companies Expensing Options Since July.

Publication: Business Wire
Publication Date: 21-NOV-02 		Format: Online
Delivery: Immediate Online Access

Article Excerpt
Business Editors

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NEW YORK--(BUSINESS WIRE)--Nov. 21, 2002

How did investors respond to the announcements made since July by more than 100 companies intending to include option expense on their income statements?

The answer, according to a Towers Perrin event study that tracked share price during the 60 trading days before and 60 trading days after company declarations, is that share price performance during the period was the same, on average, as the S&P 500.

The study provides substantial support for the view that accounting portrayal of incentives does not influence stock prices. "Investors do, in fact, take into account the economic cost of options, even though such an...

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