Evidence of managerial opportunism in Australia

Andrew Trumble (Department of Finance, University of Melbourne, Parkville, Australia)
Sean Pinder (Department of Finance, University of Melbourne, Parkville, Australia)

Accounting Research Journal

ISSN: 1030-9616

Publication date: 13 July 2012

Abstract

Purpose

The purpose of this paper is to test for managerial opportunism, specifically the backdating of executive options, in Australia.

Design/methodology/approach

The paper analyses the return behaviour associated with a sample of 161 unscheduled options granted by Australian firms. Specifically, the authors test for differences between a subsample of grants that had late‐filed notices (and hence may be subject to backdating) versus those that had notices filed on‐time.

Findings

Consistent with backdating, it is found that these abnormal post‐grant returns persist for a sub‐sample of late‐filed grants but not for a sub‐sample of grants with same‐day filing. Furthermore – the authors find even stronger results for option grants made by firms with a history of late‐filing but for which no notice was filed with the Australian Securities Exchange. This paper is the first to demonstrate these effects in a setting subject to the IFRS requirement that the fair value (rather than the intrinsic value) of executive options be expensed.

Originality/value

This paper is the first to demonstrate these effects in Australia and further in a setting subject to the IFRS requirement that the fair value (rather than the intrinsic value) of executive options be expensed.

Keywords

Citation

Trumble, A. and Pinder, S. (2012), "Evidence of managerial opportunism in Australia", Accounting Research Journal, Vol. 25 No. 1, pp. 25-40. https://doi.org/10.1108/10309611211244492

Download as .RIS

Publisher

:

Emerald Group Publishing Limited

Copyright © 2012, Emerald Group Publishing Limited

Please note you might not have access to this content

You may be able to access this content by login via Shibboleth, Open Athens or with your Emerald account.
If you would like to contact us about accessing this content, click the button and fill out the form.
To rent this content from Deepdyve, please click the button.