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Discussion of “Contagion of accounting methods: evidence from stock option expensing”


Reppenhagen (Rev Account Stud, 2010) investigates how and through which channels contagion, i.e., accounting methods used by related firms, can influence a firm’s accounting choice. My discussion focuses on research design choices and the potential effect of factors other than those investigated in the study.

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  1. In a sensitivity test, the author reports that the contagion results are similar, but two of the intrinsic variables are strengthened when focusing only on the period from 2002 and onwards.

  2. As an example, the Financial Services Forum, which included as members several of the large financial firms, recommended that firms recognize stock options granted to employees as an expense, and within a few days in August 2002 there were several announcements to this effect. At the conference, some participants questioned whether such joint decisions and clustering in time could be interpreted as contagion. Regardless of the stance one takes on that question, however, there were also many financial firms that did not announce at that time, but months later—some firms many months later.

  3. The next spike in announcements does not come until March 2003 when many firms announce earnings and/or release their annual reports, and this is also when the FASB adds an employee stock options project to its agenda, suggesting that recognizing the expense according to the fair value method may become required.


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Correspondence to Per Olsson.

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Olsson, P. Discussion of “Contagion of accounting methods: evidence from stock option expensing”. Rev Account Stud 15, 658–662 (2010).

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  • Accounting choice
  • Contagion
  • Diffusion
  • Stock options

JEL Classification

  • M40
  • M41