BACKDATING AND DIRECTOR INCENTIVES: MONEY OR REPUTATION?
In: The journal of financial research: the journal of the Southern Finance Association and the Southwestern Finance Association, Band 32, Heft 4, S. 449-477
ISSN: 1475-6803
AbstractWe investigate how director incentives affect the occurrence of firms' backdating employee stock options. Directors with more wealth tied up in stock options may pursue activities that lead to personal gain, such as option backdating, which potentially increases the option recipient's compensation. We document a positive and significant association between director option compensation and the likelihood that firms backdate stock options. Our results question the effectiveness of director option compensation in aligning the interests with those of shareholders and help to explain the recent decline in the use of director option grants by many firms.