The amount of Corporate Fraud in our system is far greater and more endemic than most people want to believe.
That is the conclusion I have reached after watching The Street and senior corporate executives for 20 years. Not just at Wall Street banks, but at a vast number of publicly traded companies, the executive suite is rife with moral relativism, a daring catch-me-if-you-can attitude, and plain old venal criminality.
Now, there is further quantitative proof of this:
“The majority of companies that improperly backdated stock options never were caught by regulators or confessed to the practice, according to a new academic study.
Researchers at the University of Houston’s C.T. Bauer College of Business used a sophisticated statistical test to sift through more than 4,000 publicly traded companies for those with patterns of granting options at abnormally favorable times, often at low points for their share prices.
The study identified 141 companies with such advantageous options-granting practices that the researchers concluded they were highly likely to have been involved in backdating. Ninety-two of those companies never were publicly linked to investigations or announced earnings restatements related to backdating.”
So much for the market discovering and punishing transgressors . . .
Backdating Likely More Widespread
WSJ, AUGUST 18, 2009