Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
5086577 | Journal of Accounting and Economics | 2016 | 24 Pages |
Abstract
We find that firms grant more rank and file stock options when involved in financial reporting violations, consistent with managements' incentives to discourage employee whistle-blowing. Violating firms grant more rank and file options during periods of misreporting relative to control firms and to their own option grants in non-violation years. Moreover, misreporting firms that grant more rank and file options during violation years are more likely to avoid whistle-blowing allegations. Although the Dodd-Frank Act (2010) offers financial rewards to encourage whistle-blowing, our findings suggest that firms discourage whistle-blowing by giving employees incentives to remain quiet about financial irregularities.
Related Topics
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Accounting
Authors
Andrew C. Call, Simi Kedia, Shivaram Rajgopal,