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Paper Stats:
Abstract Views: 1034
Downloads: 293
Download Rank: 9655
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Effect of Sarbanes-Oxley Act on the Influencing of Executive Compensation
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M.P. NARAYANAN
University of Michigan - Stephen M. Ross School of Business
HASAN NEJAT SEYHUN
University of Michigan at Ann Arbor - Finance
November 2005
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Abstract:
An analysis of over 569,000 option grant filings by insiders after the imposition of the two-day reporting rule by the Sarbanes-Oxley Act (SOX) reveals that post-grant date market-adjusted stock returns are positive but lower in magnitude than pre-SOX figures, suggesting that SOX has curtailed, but not eliminated, managerial influencing of the grant day stock price. The post-grant date market adjusted stock returns are significantly more positive in the sample of late-reported grants, consistent with stock price influencing either through back-dating the grant date or timing the grant date or information flow with the intent to camouflage. The results suggest that strict enforcement of the two-day reporting rule can significantly reduce managers' ability to use these channels of influence.
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Keywords: Sarbanes-Oxley Act, Executive Compensation, Corporate Governance, Backdating, Executive Stock Options
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JEL Classifications: G30, G34, G38, K22, K42
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Working Paper Series
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Suggested Citation
Narayanan, M.P. and Seyhun, Hasan Nejat, "Effect of Sarbanes-Oxley Act on the Influencing of Executive Compensation"
(November 2005).
Available at SSRN: http://ssrn.com/abstract=852964
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Contact Information for
M.P.
NARAYANAN
(Contact Author)
Email address for M.P.
NARAYANAN
University of Michigan - Stephen M. Ross School of Business
701 Tappan Street
Ann Arbor
, MI
48109
United States
734-763-5936 (Phone)
734-936-0274 (Fax)
Contact Information for
HASAN
NEJAT
SEYHUN
Email address for HASAN
NEJAT
SEYHUN
University of Michigan at Ann Arbor - Finance
701 Tappan Street
Ann Arbor
, MI
48109-1234
United States
734-763-5463 (Phone)
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Aug 17, 2006 |
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