David Walker has posted what may be the first law prof article on backdating (there have of course been several finance articles that, in fact, gave rise to the scandal): Some Observations on the Stock Option Backdating Scandal of 2006….

In all seriousness, I think these companies just bit off more than they could chew when they were trying to attract top talent. I don’t really blame them. If I were a small tech company without a lot of capital to throw around, I might have been tempted to do the same thing.

From the restatements I’ve seen, however, the different accounting treatments can affect earnings statements pretty significantly. Altera announced, for example that it will have to restate in order to record additional non-cash stock-based compensation charges of between $38-48 million.

I agree that calling this “stealing” from shareholders is not really fair or accurate, but it is far from innocuous. The companies made representations as to their own policy and their own financial statements that were, at the very least, misleading, and at worst completely false.

So in reality, the backdating of stock options violates shareholder-approved incentive plans, and renders the representations and financial information in those plans false, not to mention the representations made to the IRS and SEC.

I’m all for creative ways to compensate executives if the market calls for it, but lying to the government and to the very investors that give the company life is not “the market.” It is fraud and it is illegal.

Would this be the stock market that did not account for Enron’s disclosure of parts of the miserable state of affairs in its footnotes? Just askin’.

Bodie begins. Ribstein replies. Bodie bangs back. Manne and Wright intervene. Back to Bodie. It’s all very interesting, but at the end of the day the discussion didn’t change my view that the problem is simply one of disclosure….