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The Economic Impact Of Backdating Of Executive Stock Options, M. P. Narayanan, Cindi A. Schipani, H. Nejat Seyhun
The Economic Impact Of Backdating Of Executive Stock Options, M. P. Narayanan, Cindi A. Schipani, H. Nejat Seyhun
Michigan Law Review
This Article discusses the economic impact of legal, tax, disclosure, and incentive issues arising from the revelation of dating games with regard to executive option grant dates. It provides an estimate of the value loss incurred by shareholders of firms implicated in backdating and compares it to the potential gain that executives might have obtained through backdating. Using a sample of firms that have already been implicated in backdating, we find that the revelation of backdating results in an average loss to shareholders of about 7%. This translates to about $400 million per firm. By contrast, we estimate that the …
Mickey, Can You Spare A Dime? Disneywar, Executive Compensation, Corporate Governance, And Business Law Pedagogy, Kenneth M. Rosen
Mickey, Can You Spare A Dime? Disneywar, Executive Compensation, Corporate Governance, And Business Law Pedagogy, Kenneth M. Rosen
Michigan Law Review
American business executives are under fire. Recent, notorious difficulties at companies such as the Enron Corporation brought attention to these individuals. Notwithstanding the conclusion of the trials of some of those top executives, skepticism remains about the inner workings of U.S. corporations and the quality of corporate governance. Drawing special scrutiny from some quarters is the compensation granted to corporate officers and directors. For instance, the timing of certain stock option grants, a key component of some compensation packages, raised ire because of those options' supposed backdating and fortuitous proximity to increases in share prices. Further, some questioned more generally …