Erik lie backdating study
This means that corporations will have less time to backdate their grants or pull any other behind-the-scenes trickery.
It also provides investors with timely access to (grant) pricing information.
In this litigious society, shareholders will almost certainly file a class-action lawsuit against the company for filing false earnings reports.
In the worst cases of options backdating abuse, the stock exchange on which the offending company's stock trades and/or regulatory bodies such as the Securities and Exchange Commission (SEC) or National Association of Securities Dealers can levy substantial fines against the company for perpetrating fraud.
On the surface - at least compared to some of the other shenanigans executives have been accused of in the past - the options backdating scandal seems relatively innocuous.
However, when granting options, the details of the grant must be disclosed, meaning that a company must clearly inform the investment community of the date that the option was granted and the exercise price. In addition, the company must also properly account for the expense of the options grant in their financials.
(To learn more, see .) Cost to Shareholders The biggest problem for most public companies will be the bad press they receive after an accusation (of backdating) is levied, and the resulting drop in investor confidence.
While not quantifiable in terms of dollars and cents, in some cases, the damage to the company's reputation could be irreparable.
Do you ever wish that you could turn back the hands of time?
Some executives have, well, at least when it comes to their stock options.