Abstract

http://ssrn.com/abstract=1593551
 
 

References (43)



 


 



Guilty Until Proven Innocent: The Economic Consequences of the Initiation and the Outcome of Internal Investigations of Option Backdating


Jennifer Li


Brock University

Fayez A. Elayan


Brock University - Department of Accounting, Faculty of Business

Thomas Meyer


Southeastern Louisiana University

January 15, 2010


Abstract:     
Backdating occurs when a company retroactively changes option grant dates to dates when its stock was trading at a relatively low price. Firm announcements of backdating generated adverse media publicity and negative pronouncements from academics regarding the economic effects and motivation of those involved. We find evidence that management engages in backdating to generate motivational benefits for employees rather than enriching themselves. By not accounting for the outcomes of the investigations the economic impact of these events is overstated and unfairly portrays nearly half of the firms as guilty when they have not engaged in intentional backdating.

Number of Pages in PDF File: 52

Keywords: Backdating, Employee Stock Options, Corporate Governance, Internal Control

JEL Classification: M41

working papers series


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Date posted: April 22, 2010  

Suggested Citation

Li, Jennifer and Elayan, Fayez A. and Meyer, Thomas, Guilty Until Proven Innocent: The Economic Consequences of the Initiation and the Outcome of Internal Investigations of Option Backdating (January 15, 2010). Available at SSRN: http://ssrn.com/abstract=1593551 or http://dx.doi.org/10.2139/ssrn.1593551

Contact Information

Jingyu Li
Brock University ( email )
500 Glenridge Avenue
St. Catherines, Ontario L2S 3A1
Canada
Fayez A. Elayan (Contact Author)
Brock University - Department of Accounting, Faculty of Business ( email )
St. Catharines, Ontario L2S 3A1
Canada
905-688-5550 (Phone)
HOME PAGE: http://www.brocku.ca
Thomas Meyer
Southeastern Louisiana University ( email )
Hammond, LA 70402
United States
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