Page 1 2
3
Another regulation that should curtail backdating,
at least for companies listed on the New York
Stock Exchange (NYSE), is a rule requiring that
the compensation committee for all companies
listed on the NYSE be completely composed of
independent, outside directors. This requirement
is in keeping with results of a study Brown (with
Marcus Caylor) conducted that set out to quantify
the quality of a company’s corporate governance
and relate that to long-term investment returns.
However, Brown said that all the regulations in
the world are only as good as how well they are
enforced.
A recent study of options grants made at
3,500 companies claims that in the two years after
SOX was enacted, almost a quarter of executives
still reported their options late.
“One would hope that between the 48-hour rule
and the FASB requirement, backdating would stop,” Brown said.
But he adds that we’ve seen it time and time again. Once one
loophole closes, another one is opened and it’s just a matter of
time before someone very clever finds it and says, check – it’s
your move.
Lawrence D. Brown, J. Mack Robinson Distinguished Professor of Accountancy,
is considered by his peers as the world’s leading expert on analysts’ forecasts
of accounting earnings. He has contributed to accounting research and
education for nearly three decades and is the author or coauthor of more than
80 publications. Brown is an associate editor of the Journal of Accounting,
Auditing and Finance, and the Review of Quantitative Finance and
Accounting. His research attracts the attention of professional security
analysts and f inancial media outlets such as the Economist, Forbes, Barron’s,
and the Wall Street Journal. In 2002 Business Finance magazine named him
to its inaugural list of 60 key influencers. This past August, Brown was recognized
by the American Accounting Association as the 2006 Outstanding Educator.
 Previous Page | Top
|
