We show that firm valuations fell after a key expense became more visible in financial statements. FAS 123-R required firms to deduct option compensation costs from earnings, instead of disclosing them in footnotes. Firms that granted high option pay experienced earnings reductions, while fundamentals remained unchanged. These firms were more likely to miss earnings forecasts, and they experienced recommendation downgrades and valuation declines. Our findings suggest that market participants exhibited limited attention to option costs before FAS 123-R. As we reuse the FAS 123-R natural experiment, we show how one can address confounding channels by integrating reduced-form and structural estimation.

中文翻译：

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对金融市场细节的关注有限：来自简化形式和结构估计的证据

我们发现，在一项关键费用在财务报表中变得更加明显之后，公司估值下降了。 FAS 123-R 要求公司从收益中扣除期权补偿成本，而不是在脚注中披露。给予高额期权薪酬的公司收益减少，但基本面保持不变。这些公司更有可能未达到盈利预测，并且经历了推荐评级下调和估值下降。我们的研究结果表明，在 FAS 123-R 之前，市场参与者对期权成本的关注有限。当我们重复使用 FAS 123-R 自然实验时，我们展示了如何通过集成简化形式和结构估计来解决混杂通道。