Theoretical and empirical work suggests that directors suffer reputation penalties in the director labor market for poor monitoring. Fried in their book —is that there is little or no accountability for excessive or abusive pay practices.However, it is unclear whether these penalties extend to poor monitoring of executive pay. However, no study has empirically examined this question. "Firm Linkages to Scandals via Directors and Professional Service Firms: Insights from the Backdating Scandal," Journal of Business Ethics, Springer, vol. Matthias Kiefer & Edward Jones & Andrew Adams, 2016. "Shared auditors in mergers and acquisitions," Journal of Accounting and Economics, Elsevier, vol. "The power of the pen reconsidered: The media, CEO human capital, and corporate governance," Journal of Banking & Finance, Elsevier, vol. Initially, many believed that stock option backdating might have been concentrated in the high tech area.Later, many thought that the practice occurred predominately during the period before the passage of the Sarbanes-Oxley Act in 2001.
This conclusion would clearly make the practice much more wide-spread than anyone had initially thought.This study focuses on whether board independence explains stock price reactions to backdating and factors that explain backdating decision.Consistent with previous studies, we find negative stock returns around backdating news.Our analysis provides new insight into how boards function and the role that they play in providing managerial oversight and determining corporate strategy. Published by Oxford University Press on behalf of The Society for Financial Studies. For Permissions, please e-mail: [email protected], Oxford University Press.A new study by finance professors suggests that the backdating of stock options may be a much more wide-spread practice than once thought.