Open AccessBack-dated stock options and restatements of suspect earnings: Is there a correlation?
Author(s) -
Joe Ueng,
Daryl Koehn
Publication year - 2016
Publication title -
corporate ownership and control
Language(s) - English
Resource type - Journals
eISSN - 1810-0368
pISSN - 1727-9232
DOI - 10.22495/cocv13i2p8
Subject(s) - suspect , earnings , stock (firearms) , business , stock price , accounting , psychology , history , biology , series (stratigraphy) , archaeology , paleontology , criminology
A large number of US companies seem, almost miraculously, to have granted options on dates that coincided with low stock prices. Scholars have documented a pattern of sharp stock appreciation after executives had received stock grants. The pattern suggests that back-dating has occurred. This paper examines whether firms that have restated suspect earnings (we exclude restatements due to backdating) are more likely than non-restaters either to have admitted to back-dating options or to be at risk of being back-daters. We find that both Fortune 500 and non-Fortune 500 restating firms are more likely to be actual back-daters than non-restating firms. Fortune 500 restaters are also more likely to be potential back-daters.