Rim backdating stock
Since the average is statistically significant, this means that the abnormal returns are experienced by a large proportion of companies.This result is consistent with a simple hypothesis: that companies award unscheduled options when they believe their shares to be undervalued.Data Our option grant data is obtained from the Micromedia and SEDI databases for the period from July 1, 1995 to December 31, 2006 we include option grants if the stock traded on the Toronto Stock Exchange and if we have news data for the company.The news data are obtained from two sources: 1) for the period July 1995 to December 2000 from CANSTOCK, an electronic database of all public newswire releases for the TSX; and 2) for the period January 2000 to December 2006 from (a division of CTV Globemedia Publishing inc.).The second big change was the introduction of SEDI—a web-based reporting system—on June 9, 2003.Mc Nally and Smith (2010) document how both changes improved the timeliness and accuracy of reported insider trading information.The timing of stock option grants has been a controversial issue in recent years.
While it would be interesting to analyze these changes, this is outside our sample period.
In many cases, multiple insiders receive options on the same day.
Our interest is in the stock price behaviour around the option grant date, so each option grant date is included only once, regardless of how many insiders receive options on that date.
In February of 2009, Balsillie and Lazaridis agreed to pay million to settle the OSC backdating charges.
An alternative method for managers to enrich themselves with stock options is spring-loading. They conjecture that CEOs manipulate news announcements and not option grant dates.
With spring-loading, managers issue option grants on a date that precedes or follows news releases they know will have a positive or negative impact on the stock. studies have found evidence consistent with option backdating and spring- loading. He finds no abnormal stock returns before option grant dates but significant evidence of abnormal returns in the 50 days after grant dates. To test this, they analyze options that are granted on a regular annual basis (scheduled option grants).