Evidence of Managerial Opportunism in an IFRS Environment

Abstract:     
This paper tests for managerial opportunism, specifically the backdating of executive options, in a market subject to IFRS accounting requirements. For a sample of 161 unscheduled options granted by Australian firms, we observe positive abnormal returns in the post-grant period. Consistent with backdating, we find that these abnormal post-grant returns persist for a sub-sample of late-filed grants but not for a sub-sample of grants with same-day filing. This paper is the first to demonstrate this effect in a setting subject to the IFRS requirement that the fair value (rather than the intrinsic value) of executive options be expensed.

Number of Pages in PDF File: 26

Keywords: Options backdating, Managerial opportunism, International Financial Reporting Standards

JEL Classification: G10, G30

working papers series