How Do Accounting Practices Spread? An Examination of Law Firm Networks and Stock Option Backdating
研究发现，股票期权回溯这一会计实践通过律师事务所网络在公司间传播；若公司律师曾服务过回溯客户，其回溯概率提高53%至88%，且该效应独立于董事会关联和地理位置。
ABSTRACT We hypothesize that one way accounting practices spread is through law firm connections. We investigate this prediction by examining companies that avoided reporting compensation expense by engaging in stock option backdating. We hypothesize that executives engaged in backdating because they were desensitized to its inappropriateness when they learned through their legal counsel that other companies were engaging in this practice. We identify backdating companies through backdating-related restatements of earnings. Using network analysis, we find that backdating companies are highly connected with other backdating companies via shared law firms. Logistic regressions reveal that the odds of a company backdating are 53 to 88 percent higher when its law firm has another client that backdates, and that law firm connections are incremental to board interlocks and geographic location. Finally, law firms with backdating clients have more other clients with “lucky” grants, suggesting that backdating spread to other companies, but only some restated. JEL Classifications: J33; K22; K42; L14; M41; M43; M45.