They say that one should not look a gift horse in the mouth.
We decided to go against this proverb and look carefully in the mouth of one such gift horse.
We find that corporate executives’ gifts of stock while not quite poisonous, do have a dark side.
Penalty for backdating charitable contributions
We propose that the reporting requirements for gifts be harmonized with other insider transactions to require reporting within two business days of the gift.
Second, we propose increased penalties for late reporting of gift transactions.  Suppose that a stock purchased at $100 was gifted when the stock price reached $200 and subsequently, the stock price declined back to $50 after the gifting.
Consequently, our findings are general and apply to all executives’ gifts of their firm’s stock.
Given the large dollar volume of gifts covered and the comprehensive nature of the study, our findings are important from legal, economic, as well as public policy perspectives.
We suggest policy recommendations that should improve the compliance of gifts with the requirements of SOX as well as general anti-fraud provisions of federal securities laws. tax law, the donor of gifts of stock to public or private charitable foundations may obtain a personal income tax deduction for the market value of the shares while simultaneously avoiding the capital gains tax that would be due if the shares were sold. York Professor of Business Administration and Professor of Finance, University of Michigan.