This research investigates the effects of delays by accounting policy-setters in reconciling the accounting treatment of stock options and stock appreciation rights (SARs). Comment letters to the FASB concerning Interpretation No. 28, observed SAR adoption practices, direct survey results from companies not adopting SARs, stock prices' reaction to the related accounting policy process, and the structure of SAR plans are analyzed. Analysis of the content of lobbyists' letters, descriptive statistics, t-tests, correlation coefficients, and an event study of related AICPA and FASB announcements are utilized. The evidence supports the hypotheses that the accounting treatment of SARs has deterred companies with stock option plans from adopting SARs, has deterred smaller companies from adopting SARs to a greater extent than it has deterred larger companies, has had a discernible "bad news" effect on the market, and has affected the form of those SAR plans which have been adopted. The recent advent of so-called "stock depreciation rights" may well lead to the elimination of SARs, largely due to the accounting treatment of SARs.

Accounting policy makers and taxation authorities have been concerned with the understatement of depreciation expense that can accompany the use of generally accepted depreciation procedures. In addressing this concern, the taxation authorities have adopted a new method of historical cost depreciation known as the Accelerated Cost Recovery System (ACRS). Accounting policy makers, on the other hand, have addressed the "underdepreciation" issue with an experimental program of current cost depreciation disclosure. This paper presents a comparative analysis of the depreciation charges associated with the ACRS and current cost depreciation systems. The results of the analysis show that, for a variety of growth and price change conditions, the ACRS and current cost procedures can provide similar depreciation charges. As such, the ACRS techniques can alleviate considerably the "underdepreciation" effects that have been associated with some of the traditional historical cost depreciation methods.