oPtion$ book club - oPtion$ as Social Commentary

Since this is a discussion on an academic blog, it seems appropriate to consider how oPtion$ might contribute to our understanding of corporate governance, corporate law, and enforcement policies.  The power of satire as social commentary lies in its ability to point out indirectly those realities so blatant as to be frequently overlooked.  Unlike Michael Dorff, I think the book succeeds on this level. 

One small example: my son, who overheard me discussing the book asked  me "Who's Steve Jobs?'  Invoking fake steve's favorite retort, I replied "Dude, he invented the friggin iPod.  Have you heard of it?"  "I thought Apple invented the iPod," my son asked innocently.  "Yes," I explained, "but Steve Jobs is in charge of Apple."  My son persisted, "but didn't his workers invent the iPod?"

With one humorous line -- Dude, I invented the friggin iPod.  Have you heard of it? -- Lyons exposes a common foible among corporate executives.  They gladly hog credit for corporate successes and are quick to blame others, or factors beyond their control, for corporate failures.

More significantly, fake steve's attitude toward corporate regulation and law enforcement lends support to the academic school of thought that links compliance with law with perceptions of law's legitimacy.  Scholars such as Tom Tyler, John Darley and Paul Robinson argue that the extent of law compliance is determined less by concerns with penalties and more by an individual's sense of moral obligation to obey the law.  This sense of obligation is supported by perceptions of the legitimacy of the law and its enforcement mechanisms and procedures.  When law or law enforcement is perceived as illegitimate, the sense of obligation to obey the law erodes.

Fake steve's reaction to the options backdating investigations underscores this point.  According to fake steve, "These idiots went after dozens of companies in Silicon Valley.  They concocted a fairy tale about greedy executives lining their pockets and cheating investors, and of course the nitwits in the press bought the whole story and ran with it."

Fake steve proceeds to denigrate everyone involved in the investigation. When that doesn't work he finds a scapegoat, and throws a trusted associate under a bus.  When the scapegoat flips to become a government witness fake steve's first  instinct is to have him killed.

The link between legitimacy and law compliance raises questions as to what, if any, responsibility corporate scholars bear for the degree of disrespect for corporate regulation that seems to have persisted in Sarbanes-Oxley's wake.  Robert Prentice and Jay Brown, among others, have pointed out the corroding effects that academic attacks on Sarbanes-Oxley as "quack corporate governance" or a "debacle" may have on the general level of respect for corporate laws.  These vehement academic attacks when taken to their logical extreme help make the scene from oPtion$, in which Senator Sarbanes and Representative Oxley are burned in effigy, appear to be a legitimate political protest.