Can Backdating Explain the Abnormal Returns around Taiwanese Employee Stock Option Grants?
Date Issued
2007
Date
2007
Author(s)
Chen, Kai-Fu
DOI
en-US
Abstract
This study takes a glimpse of the backdating practices capturing plenty of attention of academics and policy makers in U.S. or Canada, and we also try to analyze whether backdating could also take place in Taiwan. Using the sample of Taiwanese employee stock option awards among TSE(Taiwan Stock Exchange) listed and OTC firms firm 2001 to Dec 7th 2006, we find that stock prices fall gradually before the option grant dates and surge significantly following the grant date, generating sharp reversal of abnormal stock returns. Interestingly the abnormal return pattern around the grant date is very similar to American and Canadian ones. We also find when executives have the incentive (i.e., more shares granted) and the ability (such as poor corporate governance, employee stock option plan influenced by top managers or family group) to influence the timing of employee stock option grants, the abnormal return pattern would be more discernible. Our research indicates that backdating could also explain Taiwanese abnormal returns around employee stock option grants
Subjects
員工認股選擇權
事件研究法
回溯日期
employee stock options
event-study
backdating
Type
other