Differential regulation in the accounting treatment of stock options under IFRS 2 and Italian accounting rules: a matter of accounting framework?

The introduction of IAS/IFRSs in Italy, as in some other European countries, has determined the creation of a “dual” accounting system of reference for the preparation of financial statements. In fact, the national and the IAS/IFRSs systems coexist and lead to different representations of the assets and liabilities and the revenues and expenses of the same company or group of companies. This clearly results in a situation of differential regulation amongst diverse kinds of companies within the same country. This paper focuses on a prime example of the aforementioned “duality”: the recognition in financial statements of equity compensations. In particular, while the IAS/IFRSs require that stock options be reported as a cost item in the income statement, Italian rules do not contain any provision to such effect and, in such regulatory si-lence, no cost is recognized under usual procedure. On this premise, this study intends to verify, from a theoretical perspective, whether the differences in the accounting treatment of equity compensations can be explained by the different accounting framework that characterizes the Italian practice and the IAS/IFRSs. The analysis, which has been carried out following a two-step reasoning method based on the principles governing the calculation of net income in Italian accounting doctrine, demonstrates that the different accounting treatment of stock options cannot be explained by reasons of a technical-accounting nature, but that inquiries should be made into reasons of a different kind (if existent).