The authors also found that low-integrity CEOs had more frequent instances of option backdating
, a legal but frowned-upon event that auditors would notice but aren't required to address.
This definition covers issues such as fraudulent financial reporting (Arthaud-Day, Certo, Dalton, & Dalton, 2006; Harris & Bromiley, 2007; Ndofor et al, 2015; O'Connor et al., 2006; Zhang, Bartol, Smith, Pfarrer, & Khanin, 2008) and stock option backdating
(Aboody & Kasznik, 2000; Heron & Lie, 2007; Lie, 2005).
Many issues facing the industry, such as stock option backdating
and SEC clarifications on revenue recognition and lease accounting, posed the risk of restatement.
Example 2: A Non-Cash Earnings Misrepresentation: A company engages in option backdating
in determining stock-based compensation for 1QFY01.
In its recent charges for option backdating
, the SEC charged
It also introduces the stock option backdating
scandal of 2006 and 2007 and explains why that episode offers a unique opportunity to investigate this basic corporate law question.
Altschuler has successfully litigated cases relating to multi-billion dollar buyouts, investment stakes, tender offers and contests for corporate control, breach of fiduciary duty, financial and accounting fraud, insider trading, requests for company books and records, stock option backdating
, as well as many of the largest corporate bankruptcies in history.
possesses two basic features of accounting fraud - incentive and opportunity.
In other words, newly granted options induce CEOs to engage in either option backdating
or downwards earnings management.
This Part describes how, subsequent to O'Hagan, the unjust enrichment principle has expanded the reach of Rule 10b-5 in the areas of (1) qualitative materiality, (2) broker-dealer misappropriation, (3) mutual-fund market timing, and (4) stock option backdating
. Although other academics have examined aspects of these areas in isolation, this Article is the first to note how they are tied together by the common thread of unjust enrichment.
We recently announced a settlement of litigation over stock option backdating
that had cost the company hundreds of millions of dollars.
First, unlike prior studies, we investigate the role of compensation committees in option backdating
. Compensation committees are responsible for the approval of option grants.