Which of the following observations concerning backdating of options is true?
A) It will not result in restatement of financial statements.
B) The extraordinary timing and frequency of occurrences defied statistical probability.
C) There is no concrete evidence that managers gained because of this practice.
D) It is an accepted means of compensating managers who perform exceedingly well.

Question

Quizplus · Accepted Answer

The extraordinary timing and frequency of occurrences defied statistical probability, indicating that backdating of options was not a normal practice and may have been used deceptively. This practice has been associated with financial scandals and can result in restatement of financial statements. There is evidence that managers gained significant amounts of money through this practice, which is considered fraudulent and illegal. It is not an accepted means of compensating managers who perform exceedingly well.

Which of the Following Observations Concerning Backdating of Options Is