Backdating scorecard dating tips that work in singapore le effect

Finally, we find that suspect exercise-and-hold transactions are more likely in firms with a higher likelihood of stock option grant backdating.For the sample of exercise-and-hold transactions by insiders of firms under scrutiny for option grant backdating as listed in the “Options Scorecard”, we find that 21.53% of exercises by CEOs and 18.41% of exercises by non-CEOs occurred on the day the stock was at its lowest price during the month.That is, insiders from firms with alleged grant backdating practices were more likely to have a suspect exercise than other insiders.We also find that the firm-specific odds of option grant backdating are positively associated with the frequency of suspect exercises among firms not mentioned in the list.One likely explanation is that insiders believed the probability of getting caught was low enough to justify the risk.We also find that the firm’s foregone tax benefits from suspect exercises are of similar magnitude to the taxes saved by the CEO.Unlike exercises in which the acquired shares are sold immediately through a broker, these exercise-and-hold transactions are often accomplished in-house.Thus, we expect that opportunistic backdating, to the extent it exists, is more likely to occur in exercise-and-hold transactions.

We estimate that our sample of CEOs saved an average of thousand in taxes per exercise by exercising on the day of the month with the lowest closing stock price.We focus on a group of exercises where there likely exists both the incentive and the ability to backdate an option exercise: exercises paid in cash where the insider holds the acquired shares.Once the decision to exercise is made, insiders who plan to hold the acquired shares have an unambiguous personal tax-based incentive to exercise on the day with the lowest possible stock price.These tax savings make up only about 3.2% of the total value of the options exercised, and are even smaller at the median.Given that filing a false tax return can be a felony, can result in individual level penalties in excess of 0 thousand (among other costs), and can have significant adverse consequences for the firm and shareholders, the tax savings realized by CEOs through suspect option exercises seem remarkably modest.

Search for backdating scorecard:

backdating scorecard-14

Leave a Reply

Your email address will not be published. Required fields are marked *

One thought on “backdating scorecard”

  1. The Squier branding was originally used so that Fender could offer high quality vintage reissue guitars at price points which would compete in the highly active unauthorised copy market (which had devastated Fender’s profits), but do so without further damaging sales of its own American guitars.