Illegally Backdated Stock Options

Abstract

The illegal backdating of stock options has been studied by economists and lawyers, but totally neglected by criminologists. We examine three cases in order to convey a sense of how backdating has played out in practice, and consider the results of empirical research that has been published on the subject. Traditional legal analyses, mostly by law students, have detailed the statutory history and standing of the law regarding stock options. Economic writings focus almost exclusively on structural features that may correlate with outcomes. The failure of financial writers to carefully distinguish between criminal and noncriminal backdating is in part a consequence of the limited theoretical interpretations in their field beyond cost–benefit analysis and rational choice calculations. Criminologists, while having a plethora of theoretical constructs that might be applied to backdating, generally have no training to allow them to comprehend the arcane elements of economic criminal behavior. We conclude that more multidisciplinary attention is necessary to overcome the current pigeonholing of research approaches that limits both understanding of illegally backdated stock options and effective policies designed to prevent it.

Citation

Shichor, D., Pontell, H.N. and Geis, G. (2011), "Illegally Backdated Stock Options", Deflem, M. (Ed.) Economic Crisis and Crime (Sociology of Crime, Law and Deviance, Vol. 16), Emerald Group Publishing Limited, Leeds, pp. 127-142. https://doi.org/10.1108/S1521-6136(2011)0000016010