New accounting proposals by the International Accounting Standards Board will force listed companies to deduct the cost of stock options from their reported profits, it emerged on Thursday.
Companies will be required to recognise the cost of stock options and cash payments tied to the value of shares at the time of inception in terms of the proposals, the business daily said.
The moves come after increasing pressure on the accounting industry to disclose full share options and expenses, following the scandals which led to the bankruptcy of Enron and WorldCom, due to hidden expenses.
It is expected they will cause outcry in the business world as the proposals will in effect reduce profits.
Operating profit in US firms may fall 12 percent, and four percent in Europe, varying from sector to sector, the paper said.
Experts say that these standards could come into effect as early as 2004.