Sox and backdating


12-Mar-2020 15:19

sox and backdating-49

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When the Sarbanes-Oxley act (SOX) was signed into law on July 30, 2002, it changed the way executives at nearly every public company thought about their business.

While SOX gained attention in 20 for its focus on financial and accounting issues, the focus in 2005 has shifted to other functional areas such as Supply Chain, Human Resources and Information Technology.

Thus, we expect that opportunistic backdating, to the extent it exists, is more likely to occur in exercise-and-hold transactions.

We find that exercise-and-hold transactions tend to occur at monthly stock price lows.

Currently he is national director of client service for the Supply Chain Management practice at Resources Global Professional (

This post comes from Shane Heitzman at the University of Rochester Simon Graduate School of Business, Dan Dhaliwal at the University of Arizona and Merle Erickson at the University of Chicago Graduate School of Business.

(Section 409) As organizations trend toward more outsourcing, supply chain managers must be aware of the potential impact this will have on compliance.

As we know, SOX legislation was enacted in response to the serious misconduct of the 1990s, which had a profound impact on institutional and private investors' 401(k) accounts. exchanges, there are three primary areas addressed by SOX: SOX will force CEOs and CFOs to rely on their supply chain leaders to take a proactive role in corporate governance.

The legislation has brought the need to have transparency in financial statements to the forefront of corporate issues. It is the supply chain leader's responsibility to interpret the impact that SOX compliance has on a company's supply base and to work with the company's compliance leaders to ensure that supply chain processes have appropriate controls.

The Issues and Implications for Supply Chain Leaders While there are clear SOX implications throughout all areas of Supply Chain Management (SCM), the law does not mandate how a company must address them.

In the area of Supply Chain Management, we are making deals and agreements each day that may contain vital information for the CFO or chief compliance officer.

If any of our agreements have provisions that call for a financial obligation or penalty, we should be advising the CFO or CCO of these obligations.

Before SOX, we find that 13.55% of exercise-and-hold transactions by CEOs occurred on the day the stock was at its lowest price during the month (i.e. After SOX, only 7.20% of CEO exercise-and-hold transactions occurred on that day.