Rank and file employees and the discovery of misreporting: The role of stock options

• 成果类型: Article
• 署名作者: Call, Andrew C.; Kedia, Simi; Rajgopal, Shivaram
• 署名单位: Arizona State University; Arizona State University-Tempe; Rutgers University System; Rutgers University New Brunswick; Columbia University
• 刊物名称: JOURNAL OF ACCOUNTING & ECONOMICS
• ISSN/ISSBN: 0165-4101
• DOI: 10.1016/j.jacceco.2016.06.003
• 发表日期: 2016
• 关键词: SHORT-SELLERS; equity incentives; Investment behavior; earnings quality; Corporate fraud; COMPENSATION; FIRMS; INFORMATION; IMPACT; CONSEQUENCES

摘要

We find that firms grant more rank and file stock options when involved in financial reporting violations, consistent with managements' incentives to discourage employee whistle-blowing. Violating firms grant more rank and file options during periods of misreporting relative to control firms and to their own option grants in non-violation years. Moreover, misreporting firms that grant more rank and file options during violation years are more likely to avoid whistle-blowing allegations. Although the Dodd-Frank Act (2010) offers financial rewards to encourage whistle-blowing, our findings suggest that firms discourage whistle-blowing by giving employees incentives to remain quiet about financial irregularities. (C) 2016 Elsevier B.V. All rights reserved.