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July 09
A shocker from the business world when management incentives consist mainly in stock options, there is an increase likelihood of cooking the books to increase the stock price. As according to a study called Incentives to cheat, the influence of executive compensation at firm performance on financial misrepresentation, it's in the current issue of organization science. The author noted that two factors substantially increase the likelihood from fuzzy math to up the stock price, very low stock performance relative to the average performance of stock in the same industry, and stock options making up high percentage of CEO's compensation. The researchers found that over 5 year period there was a 9% chance that company would misrepresent its financial situation and get caught, so actual misrepresentation is probably higher than 9%. Bonuses didn't have the same effect as options, which offer much greater opportunities for windfalls, with sometimes tens of millions of dollars on the line in stock options. The authors say that's enough to motivate some executives to deliberately fudge the books. 相关的文章
stock and CEO compensation linked to option price.pdf
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[ 本帖最后由 H-Kevin 于 2007-7-9 16:32 编辑 ] |