Issues arising for accounting harmonization: the case of stock options in Italy

In Italy, national generally accepted accounting principles (GAAP) and International FinancialReporting Standards (IFRS) regulations coexist, despite differences that lead to theirantagonist forms of accounting relativism. In this context, the two accounting systems providefor different representations of stock options plans, with significant effects on year-endincome measures. This study therefore considers the emblematic case of stock options withthe goal of demonstrating, on the basis of the dominant accounting principles and conventionalwisdom in Italy, that the aforementioned difference cannot be explained by reasonsconnected with the accounting conceptual framework of reference in each system. Rather,inquiries should focus on weaknesses in national GAAP.