What Fraction of Stock Option Grants to Top Executives Have Been Backdated or Manipulated?

Heron, Randall A.; Lie, Erik

doi:10.1287/mnsc.1080.0958

Cited by 147 publications

(148 citation statements)

References 28 publications

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“…This evidence suggests that the mere institution of many incentive compensation programs is not necessarily sufficient to control the principal-agency problem. These findings provide an evidence to support Heron and Lie (2009) argument that the propensity of incentive compensation programs to align the interests of shareholders and executives may depend on the ability to accurately measure performance, the monitoring system, and the extent to which the schemes match or reinforce the culture of the company. Table 5 provides the correlation matrix between the independent and control variables.…”

Section: Impact Of Ceo Compensation On Firm Performancesupporting

confidence: 53%

CEO Cash Compensation and Firm Performance: An Empirical Study from Emerging Markets

Osei-Bonsu

Lutta

2016

BER

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The primary objective of this study is to examine whether the CEO's cash compensation is influenced by the firm's performance or whether the inverse relationship exists, where the CEO's bonus rather has a positive effect on company performance. The study includes an examination of firms listed on six emerging countries financial markets, and includes separate statistical tests on firms of different sizes and different industry sector. The findings of the study demonstrate that there is no relationship between CEO cash compensation and performance among the firms included in this study. Notwithstanding, some other incentive variables have been found as important performance boosters among companies in certain sectors. This study has been able to establish that some theories of incentive contracts hold true among firms of certain sizes as well as among firms from certain industries.

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Section: Impact Of Ceo Compensation On Firm Performancesupporting

confidence: 53%

CEO Cash Compensation and Firm Performance: An Empirical Study from Emerging Markets

Osei-Bonsu

Lutta

2016

BER

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“…Before FAS 123R became e¤ective in 2006, …rms were required to expense options only if they were in the money; in addition, Section 162(m) of the Internal Revenue Code counts options against the $1 million tax deductibility threshold for non-performance pay only if they are in the money. Thus, by disguising in-the-money options as being out of the money, …rms avoided both backdating appears to have been widespread, a¤ecting approximately 30% of …rms from 1996 to 2005 (Heron and Lie, 2009).…”

mentioning

confidence: 99%

Executive Compensation: A Survey of Theory and Evidence

Edmans¹,

Gabaix²,

Jenter³

2017

SSRN Journal

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. This paper reviews the theoretical and empirical literature on executive compensation. We start by presenting data on the level of CEO and other top executive pay over time and across firms, the changing composition of pay; and the strength of executive incentives. We compare pay in U.S. public firms to private and non-U.S. firms. We then critically analyze three non-exclusive explanations for what drives executive pay -shareholder value maximization by boards, rent extraction by executives, and institutional factors such as regulation, taxation, and accounting policy. We confront each hypothesis with the evidence. While shareholder value maximization is consistent with many practices that initially seem inefficient, no single explanation can account for all facts and historical trends; we highlight major gaps for future research. We discuss evidence on the effects of executive pay, highlighting recent identification strategies, and suggest policy implications grounded in theoretical and empirical research. Our survey has two main goals. First, we aim to tightly link the theoretical literature to the empirical evidence, and combine the insights contributed by all three views on the drivers of pay. Second, we aim to provide a user-friendly guide to executive compensation, presenting shareholder value theories using a simple unifying model, and discussing the challenges and methodological issues with empirical research. JEL-Codes: D310, D860, G340, M120. Terms of use: Documents in

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“…Heron and Lie (2009), for example, estimate that 13.6% of all option grants to top executives during the period 1996-2005 were backdated or otherwise manipulated.…”

mentioning

confidence: 99%

Extrinsic Rewards and Intrinsic Motives: Standard and Behavioral Approaches to Agency and Labor Markets

Rebitzer

Taylor

2011

Handbook of Labor Economics

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in ABSTRACTEmployers structure pay and employment relationships to mitigate agency problems. A large literature in economics documents how the resolution of these problems shapes personnel policies and labor markets. For the most part, the study of agency in employment relationships relies on highly stylized assumptions regarding human motivation, e.g., that employees seek to earn as much money as possible with minimal effort. In this essay, we explore the consequences of introducing behavioral complexity and realism into models of agency within organizations. Specifically, we assess the insights gained by allowing employees to be guided by such motivations as the desire to compare favorably to others, the aspiration to contribute to intrinsically worthwhile goals, and the inclination to reciprocate generosity or exact retribution for perceived wrongs.More provocatively, from the standpoint of standard economics, we also consider the possibility that people are driven, in ways that may be opaque even to themselves, by the desire to earn social esteem or to shape and reinforce identity.

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What Fraction of Stock Option Grants to Top Executives Have Been Backdated or Manipulated?

Cited by 147 publications

References 28 publications

CEO Cash Compensation and Firm Performance: An Empirical Study from Emerging Markets

CEO Cash Compensation and Firm Performance: An Empirical Study from Emerging Markets

Executive Compensation: A Survey of Theory and Evidence

Extrinsic Rewards and Intrinsic Motives: Standard and Behavioral Approaches to Agency and Labor Markets

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