The impact of the options backdating scandal on shareholders

Gennaro Bernile, Gregg A. Jarrell

Research output: Contribution to journalArticlepeer-review

55 Scopus citations


The revelation that scores of firms engaged in the illegal manipulation of stock options' grant dates (i.e. "backdating") captured much public attention. The evidence indicates that the consequences stemming from management misconduct and misrepresentation are of first-order importance in this context as shareholders of firms accused of backdating experience large negative, statistically significant abnormal returns. Furthermore, shareholders' losses are directly related to firms' likely culpability and the magnitude of the resulting restatements, despite the limited cash flow implications. And, tellingly, the losses are attenuated when tainted management of less successful firms is more likely to be replaced and relatively many firms become takeover targets.

Original languageEnglish (US)
Pages (from-to)2-26
Number of pages25
JournalJournal of Accounting and Economics
Issue number1-2
StatePublished - Mar 2009


  • Agency costs
  • Corporate scandal
  • Event-study
  • Option backdating

ASJC Scopus subject areas

  • Accounting
  • Finance
  • Economics and Econometrics


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