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Activity Number:
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515
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Type:
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Contributed
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Date/Time:
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Wednesday, August 5, 2009 : 2:00 PM to 3:50 PM
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Sponsor:
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Business and Economic Statistics Section
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| Abstract - #304918 |
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Title:
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EFFECTS OF CORPORATE FORM AND FINANCIALS ON EXECUTIVE BACKDATING OF STOCK OPTIONS AT THE TURN OF THE CENTURY: AN ANALYSIS OF PAIR-MATCHED CORPORATIONS
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Author(s):
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Don R. Warren*+ and Mary Zey and John Garza
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Companies:
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The University of Texas at San Antonio and The University of Texas at San Antonio and The University of Texas at San Antonio
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Address:
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Demography (Mail Code 00618), San Antonio, TX, 78249,
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Keywords:
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Pair Matching ; Propensity Scores ; Corporate Fraud
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Abstract:
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Using a matched-pair statistical analysis, we found that a particular financial-structure combination predicts executive stock-option backdating. First, firms in which executives backdate stock options tend to be of the multi-subsidiary (instead of the divisional) form. Second, these backdating firms tend to be smaller in net sales than other corporations. Third, firms with backdating executives have preferred stock-liquidation values lower than others. Fourth, firms with backdating executives carried larger pools of debt than others. Fifth, firms in which executives backdate stock options hold larger pools of cash and short-term investment than others. These findings support the high-risk dominant-managerial executive power model of corporate control and the structural holes theory developed by Burt (1992).
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