Most companies that improperly backdated stock options never were caught by regulators or confessed to the practice, according to a study from the University of Houston’s C.T. Bauer College of Business. Researchers there used a statistical test to sift through more than 4,000 publicly traded companies for those with patterns of granting options at abnormally favorable times, often at low points for their share prices, said the Wall Street Journal. The study identified 141 companies with such advantageous options-granting practices that the researchers concluded were highly likely to have been involved in backdating. Ninety-two of those companies never were publicly linked to investigations or announced earnings restatements related to backdating. The companies include advertising agency Omnicom Group, retailer Dress Barn, trucking firm J.B. Hunt Transport, and equipment-rental company United Rentals.
Report – Backdating Likely More Widespread
A new study demonstrates that improper stock option backdating is generally not caught.
August 18, 2009