Recent developments in accounting for stock options have increased interest in the analytical techniques used to value them. Techniques used to value the options of publicly traded companies have been extensively discussed. In contrast, there has been almost no discussion of the valuation...

Accounting for stock options is a controversial issue. The FASB recognized that the Òintrinsic valueÓ method, which had been used for years, failed to adequately account for the costs involved. To rectify the problem they suggested the use of a Òfair valueÓ method. Their proposal met with...