Effects of Corporate Form and Financials on Executive Backdating of Stock Options at the Turn of the Century: An Analysis of Pair-Matched Corporations

Warren, Don; Zey, Mary; Garza, J.

doi:10.1007/978-94-007-2297-2_12

Cited by 1 publication

(1 citation statement)

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“…Thus, the control of owners was even more remote from managers through the layers of subsidiary ownership of these firms. Managers at the parentcorporate-level operate through financial controls instead of monitoring and gate keeping (Warren et al, 2009;Chong et al, 2009). Thus, the CEO has little control over profits, which he intends to control, and even less over fraud, which is purposely being concealed and of which he has no knowledge and therefore no intent to control.…”

Section: Stock Options For Performancementioning

confidence: 99%

Earnings fraud: board control vs CEO control and corporate performance - 1992-2004

Warren

Zey

Granston

et al. 2010

Manage. Decis. Econ.

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The turn of the millennium is associated with increased corporate fraud, largely attributed to the failure of corporate governance. The compensation committee is expected to minimize fraud by rewarding only appropriate CEO behavior. A causal modeling approach, the Directed Acyclic Graph, was used to estimate the structure of corporate fraud. Corporate fraud was measured as illegal earnings statement(s), not all restatements but only those found illegal. A major finding is that the CEO's stock-option compensation motivates the CEO to commit corporate earnings fraud, while cash salaries and bonuses are only indirectly related to earnings fraud through those stock options.

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Section: Stock Options For Performancementioning

confidence: 99%