behavior. I exploit a unique setting created by the introduction of Financial Accounting Standard (FAS) 123R in 2005, which led … forecasts decreases by 14–20%. The results show that the relatively high levels of meet-or-beat before FAS 123R were largely …

changes instigated by the FAS 123R accounting regulation in 2005 that mandated stock option expensing at fair values. Our … risk-taking incentive after the implementation of FAS 123R leads to a significant reduction in innovation related to firm …