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- Title
The Dating Game: Do Managers Designate Option Grant Dates to Increase their Compensation?
- Authors
Narayanan, M. P.; Seyhun, H. Nejat
- Abstract
We provide evidence of two variants of a dating game that entails picking a grant date expost, that is, after the board's compensation decision is made: back-dating (picking a date before the board decision date), and forward-dating (waiting after the board decision date to observe the stock price behavior) Consistent with back-dating, we find stock return behavior around the grant date to be positively related to reporting lag. In the promptly reported sample, we find stock return behavior and the pattern of reporting lags consistent with forward-dating. Our calculations show that managers can obtain economically significant benefits by playing the dating game.
- Subjects
MATHEMATICAL models of option; OPTIONS (Finance); STOCK options; CORPORATE governance; RESEARCH; EXECUTIVE compensation; MATHEMATICAL models of finance; FINANCE; MANAGEMENT
- Publication
Review of Financial Studies, 2008, Vol 21, Issue 5, p1908
- ISSN
0893-9454
- Publication type
Article
- DOI
10.1093/rfs/hhm044