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Lie Study Cited

A story about an investigation by the SEC into questionable options grants by executives cites a study by ERIK LIE, a finance professor at the University of Iowa's school of business, and Randall Heron of Indiana University's business school, which found that the unusual timing essentially stopped after August 2002, thanks to the Sarbanes-Oxley Act, which requires executives to report option grants within two days, instead of the weeks or months previously allowed. With less leeway to choose a favorable grant date, "most of the effect disappeared," said Lie. Lie also said that any backdating likely occurred at only a small fraction of companies.

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