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Department of Accounting

Conference attendance: George

Posted on 27 July 2011

Denice Pretorius attended the SAAA Conference in George from 27 to 29 June 2011. She presented a paper, entitled: 'The effect of share-based payments on earnings per share of South African listed companies'.

This study investigates the post-implementation impact of expensing share-based payment transactions on earnings per share. In recent years IFRS2 was one of the most opposed and controversial standards issued by the IASB which affects South African companies. The findings of this study show a statistically significant impact on basic earnings per share, but the results are more modest than anticipated by prior studies. IFRS2 was mandatory for listed South African companies for all financial periods beginning on or after 1 January 2005, but none of the companies reported a share-based payment transaction for the 2005 financial period. The number of companies reporting a share-based payment expense increased over the period of 2005 to 2009. The introduction of IFRS2 caused small but not necessarily immaterial changes to the income profile of companies. This is important for analysts and general users of financial information who need to be aware of these changes. The results also suggest that IFRS2 did not merely cause accounting policy changes, but has also impacted on the way share-based payment transactions are used by companies.

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