Accounting Errors to Cost Executives Their Bonuses Under SEC Rule
Accounting Errors to Cost Executives Their Bonuses Under SEC Rule Heading link
The Wall Street Journal covers research from a group of finance professors at the University of Arizona, the University of Delaware and the University of Illinois at Chicago that examined the stock-market reactions of S&P 1500 firms after the SEC unveiled the proposed clawback rule in 2015. They found that companies without existing clawback policies—those most likely to be affected by the rule—exhibited “positive abnormal stock returns” following the announcement.
The finding, from a paper on executive clawback policy by Tor-Erik Bakke, Associate Professor of Finance and co-authors, suggests that the adoption of a clawback policy “would, on average, enhance shareholder value for firms without an existing policy,” one of the authors wrote in a comment letter to the SEC in May.