December 18, 2006
Bebchuk's Study on Back Dated Options Reveals that Outside Directors Were Beneficiaries
One of the many findings of the Bebchuk et al study on options back dating is that outside directors (over 1,400 of them) were beneficiaries of the illegal practice. Those who trumpet the value of outside directors as monitors of corporate behavior will have to explain why the outside directors not only did not stop the practice but also why they also put their fingers in the till. The SEC may attempt to move against some outside directors in the options backing scandal to make examples of them and put all others on warning that they need to take their jobs as monitors of insider integrity more seriously.
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And this "scandal" has had exactly what effect on investors? The anecdotal data seems to be none to positive.
It is not at all clear to me why the academics think this is a systemic problem. From my perspective as a corporate securities lawyer, this "scandal" is more the perfect intersection of sloppy grant practices and arcane accounting and tax rules than a deliberate attempt at self-enrichment by management.
Posted by: Steven Donegal | Dec 18, 2006 4:17:35 PM