Rank and file employees and the discovery of misreporting: The role of stock options

• Autores: Andrew C. Call, Simi Kedia, Shivaram Rajgopal
• Localización: Journal of accounting and economics, ISSN 0165-4101, Vol. 62, Nº. 2-3, 2016, págs. 277-300
• Idioma: inglés
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• Dialnet Métricas: 1 Cita
• Resumen

  • 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.