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Author: John M. Bizjak
Publisher:
ISBN:
Category :
Languages : en
Pages : 42
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Book Description
We examine the role of board connections in explaining how the controversial practice of backdating employee stock options spread to a large number of firms across a wide range of industries. The increase in the likelihood that a firm begins to backdate stock options that can be explained by having a board member who is interlocked to a previously identified backdating firm is approximately one third of the unconditional probability of backdating in our sample. Our analysis provides new insight into how boards function and the role that they play in providing managerial oversight and determining corporate strategy.
Author: John M. Bizjak
Publisher:
ISBN:
Category :
Languages : en
Pages : 42
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Book Description
We examine the role of board connections in explaining how the controversial practice of backdating employee stock options spread to a large number of firms across a wide range of industries. The increase in the likelihood that a firm begins to backdate stock options that can be explained by having a board member who is interlocked to a previously identified backdating firm is approximately one third of the unconditional probability of backdating in our sample. Our analysis provides new insight into how boards function and the role that they play in providing managerial oversight and determining corporate strategy.
Author: Karen Brenner
Publisher:
ISBN:
Category :
Languages : en
Pages : 14
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Book Description
Companies grant compensatory option awards to provide retention and long term value creation incentives, aligning long term interests of shareholders and managers. The options issued by publicly traded companies in the US tend to be similar in design. Generally, the options are issued pursuant to a shareholder approved stock option plan, have an exercise price equal to the fair market value of the stock on the date of grant, become exercisable over a period of time, and expire at a fixed point in time after the date of grant. Academic work, bolstered by the financial press, has provided a body of evidence that suggests that many companies have issued options at prices below the market price at the date of grant. Such conduct, while not necessarily illegal, could give rise to a series of issues which have ranged from the grant of immediate compensation as opposed to retention and incentive compensation, to violating a corporation's stock option plan, to the improper corporate disclosure of compensation and therefore earnings, ultimately resulting in potential violations of tax and securities laws. These concerns have cast both ethical and legal clouds over many companies. This paper will review the recent academic literature on the topic of stock option backdating. It is clear that several academicians were instrumental in providing the early insight into this practice that has led to the public scandal. While the literature will show that the Sarbanes-Oxley Act of 2002 (SOX) has had a substantial effect in altering certain stock option practices it will also highlight that there are still a number of open issues needing the attention of corporate boards of directors.The academic work reviewed in this paper focuses on stock option grant manipulations of various types and their implications. Such manipulations include information timing, backdating of stock option grant dates and altering the exercise dates of stock options. The literature reviewed also discusses the economic impact of such events, including different means of calculating the manipulation of these grants, and the loss of overall market capitalization of the implicated firms. Other papers focus on director grants that are associated with opportunistic timing and the migration of backdating across firms due to board interlocks and weak corporate governance.
Author: Jesse M. Fried
Publisher:
ISBN:
Category :
Languages : en
Pages : 1
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Book Description
Thousands of US companies appear to have secretly backdated stock options. This paper analyzes three forms of secret option backdating: (1) the backdating of executives' option grants; (2) the backdating of non-executive employees' option grants; and (3) the backdating of executives' option exercises. It shows that each type of backdating less likely reflects arm's-length contracting than a desire to inflate and camouflage executive pay. Secret backdating thus provides further evidence that pay arrangements have been shaped by executives' influence over their boards. The fact that so many firms continued to secretly backdate after the Sarbanes Oxley Act, in blatant violation of its reporting requirements, suggests recent reforms may have failed to adequately curb such managerial power.
Author: David Larcker
Publisher: Pearson Education
ISBN: 0134031636
Category : Business & Economics
Languages : en
Pages : 540
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Book Description
This is the most comprehensive and up-to-date reference for implementing and sustaining superior corporate governance. Stanford corporate governance experts David Larcker and Bryan Tayan carefully synthesize current academic and professional research, summarizing what is known and unknown, and where the evidence remains inconclusive. Corporate Governance Matters, Second Edition reviews the field's newest research on issues including compensation, CEO labor markets, board structure, succession, risk, international governance, reporting, audit, institutional and activist investors, governance ratings, and much more. Larcker and Tayan offer models and frameworks demonstrating how the components of governance fit together, with updated examples and scenarios illustrating key points. Throughout, their balanced approach is focused strictly on two goals: to "get the story straight," and to provide useful tools for making better, more informed decisions. This edition presents new or expanded coverage of key issues ranging from risk management and shareholder activism to alternative corporate governance structures. It also adds new examples, scenarios, and classroom elements, making this text even more useful in academic settings. For all directors, business leaders, public policymakers, investors, stakeholders, and MBA faculty and students concerned with effective corporate governance.
Author: Lucian A. Bebchuk
Publisher: Harvard University Press
ISBN: 9780674020634
Category : Business & Economics
Languages : en
Pages : 308
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Book Description
The company is under-performing, its share price is trailing, and the CEO gets...a multi-million-dollar raise. This story is familiar, for good reason: as this book clearly demonstrates, structural flaws in corporate governance have produced widespread distortions in executive pay. Pay without Performance presents a disconcerting portrait of managers' influence over their own pay--and of a governance system that must fundamentally change if firms are to be managed in the interest of shareholders. Lucian Bebchuk and Jesse Fried demonstrate that corporate boards have persistently failed to negotiate at arm's length with the executives they are meant to oversee. They give a richly detailed account of how pay practices--from option plans to retirement benefits--have decoupled compensation from performance and have camouflaged both the amount and performance-insensitivity of pay. Executives' unwonted influence over their compensation has hurt shareholders by increasing pay levels and, even more importantly, by leading to practices that dilute and distort managers' incentives. This book identifies basic problems with our current reliance on boards as guardians of shareholder interests. And the solution, the authors argue, is not merely to make these boards more independent of executives as recent reforms attempt to do. Rather, boards should also be made more dependent on shareholders by eliminating the arrangements that entrench directors and insulate them from their shareholders. A powerful critique of executive compensation and corporate governance, Pay without Performance points the way to restoring corporate integrity and improving corporate performance.
Author: Patricia M. Dechow
Publisher: Research Foundation of the Institute of Chartered Financial Analysts
ISBN: 9780943205687
Category : Corporate profits
Languages : en
Pages : 152
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Book Description
Author: Panagiotis E. Petrakis
Publisher: Springer Nature
ISBN: 3031313356
Category : Political Science
Languages : en
Pages : 267
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Book Description
This book examines the economic interconnections of the Greek economy at a macro and micro level, allowing it to explore both the economic relations between the various sectors and the interconnections of various companies and overlaps in management boards. Two approaches are used to quantify interdisciplinary and cross-sectoral interfaces: the traditional input-output analysis approach and the “influence and information flow” approach through network analysis. The book's first part presents the current conditions and the economic interconnections within the Greek economy. In the second part, during the analysis of microeconomic interconnections between individuals and companies, a much more thorough presentation of the economic interconnections of Greek companies is established. Finally, the book’s third part presents how the Greek economy must transform its production prototype under structural constraints and opportunities for economic diversification and inclusive growth and under the pressure of economic shocks and uncertainty.
Author: Carol Alexander
Publisher: John Wiley & Sons
ISBN: 1394178158
Category : Business & Economics
Languages : en
Pages : 624
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Book Description
Identifying malpractice and misconduct should be top priority for financial risk managers today Corruption and Fraud in Financial Markets identifies potential issues surrounding all types of fraud, misconduct, price/volume manipulation and other forms of malpractice. Chapters cover detection, prevention and regulation of corruption and fraud within different financial markets. Written by experts at the forefront of finance and risk management, this book details the many practices that bring potentially devastating consequences, including insider trading, bribery, false disclosure, frontrunning, options backdating, and improper execution or broker-agency relationships. Informed but corrupt traders manipulate prices in dark pools run by investment banks, using anonymous deals to move prices in their own favour, extracting value from ordinary investors time and time again. Strategies such as wash, ladder and spoofing trades are rife, even on regulated exchanges – and in unregulated cryptocurrency exchanges one can even see these manipulative quotes happening real-time in the limit order book. More generally, financial market misconduct and fraud affects about 15 percent of publicly listed companies each year and the resulting fines can devastate an organisation's budget and initiate a tailspin from which it may never recover. This book gives you a deeper understanding of all these issues to help prevent you and your company from falling victim to unethical practices. Learn about the different types of corruption and fraud and where they may be hiding in your organisation Identify improper relationships and conflicts of interest before they become a problem Understand the regulations surrounding market misconduct, and how they affect your firm Prevent budget-breaking fines and other potentially catastrophic consequences Since the LIBOR scandal, many major banks have been fined billions of dollars for manipulation of prices, exchange rates and interest rates. Headline cases aside, misconduct and fraud is uncomfortably prevalent in a large number of financial firms; it can exist in a wide variety of forms, with practices in multiple departments, making self-governance complex. Corruption and Fraud in Financial Markets is a comprehensive guide to identifying and stopping potential problems before they reach the level of finable misconduct.
Author: Jonas Gabrielsson
Publisher: Edward Elgar Publishing
ISBN: 1786439751
Category : Business & Economics
Languages : en
Pages : 488
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Book Description
Boards of directors are complex systems, and it is imperative to understand what the contextual forces are that shape the direction and make-up of boards. This Research Handbook provides inspiration for researchers and practitioners interested in the manifold dimensions and facets of context surrounding boards of directors.
Author: Graeme Guthrie
Publisher: Oxford University Press
ISBN: 0190641207
Category : Business & Economics
Languages : en
Pages : 353
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Book Description
A battle is being fought within corporations. Shareholders want managers to make their shares as valuable as possible, managers want shareholders to leave them alone, and the board of directors is caught in the middle. The Firm Divided shows how strong boards persuade managers to do what's best for shareholders-and why weak boards don't. Graeme Guthrie blends the stories of particular firms and individuals with the insights of scholarly research, enhancing understanding of how seemingly separate events are consequences of the separation of ownership and control, the ultimate cause of manager-shareholder conflict. Boards of directors can affect the outcome of this conflict by monitoring managers, providing incentives for managers to work in shareholders' best interests, delegating monitoring to outside parties, and influencing the effectiveness of the market for corporate control. How directors do this depends on how they weigh their fiduciary duty to shareholders against the close ties that bind them to senior executives. The Firm Divided provides conceptual insight, underpinned by research into corporate governance, into board-manager interactions. It shows how tools that can benefit shareholders when used by strong boards can actually harm shareholders when used by weak boards. Guthrie provides a 360 degree view of firms, exploring the ways in which each player pursues their own goals, with examples from a range of firms in diverse industries.
