Evidence of managerial opportunism in Australia

Andrew Trumble and Sean Pinder

Accounting Research Journal, 2012, vol. 25, issue 1, 25-40

Abstract: Purpose - The purpose of this paper is to test for managerial opportunism, specifically the backdating of executive options, in Australia. Design/methodology/approach - The paper analyses the return behaviour associated with a sample of 161 unscheduled options granted by Australian firms. Specifically, the authors test for differences between a subsample of grants that had late‐filed notices (and hence may be subject to backdating) versus those that had notices filed on‐time. Findings - Consistent with backdating, it is found that these abnormal post‐grant returns persist for a sub‐sample of late‐filed grants but not for a sub‐sample of grants with same‐day filing. Furthermore – the authors find even stronger results for option grants made by firms with a history of late‐filing but for which no notice was filed with the Australian Securities Exchange. This paper is the first to demonstrate these effects in a setting subject to the IFRS requirement that the fair value (rather than the intrinsic value) of executive options be expensed. Originality/value - This paper is the first to demonstrate these effects in Australia and further in a setting subject to the IFRS requirement that the fair value (rather than the intrinsic value) of executive options be expensed.

Keywords: Options backdating; Managerial opportunism; Executive compensation; Australia; Pay (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eme:arjpps:v:25:y:2012:i:1:p:25-40

DOI: 10.1108/10309611211244492

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