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Lie Research Led To SEC Investigations

More than 45 companies have disclosed that they are the subject of regulatory, criminal or internal probes into whether they tried to improperly inflate executives' pay through a practice known as backdating stock options, and experts say the number is likely to grow. ERIK LIE, one of two academics whose work led to the investigations of options backdating, said he has "very mixed feelings" about the results of his research. "Whenever we do research, we like for the research to be recognized," Lie, a finance professor at the University of Iowa, said in an interview last week. "On the other hand ... a lot of innocent people are being affected by this, shareholders and employees who might lose their jobs -- that's a sad side of it." Research by Lie and Randall Heron, who teaches finance at Indiana University, inspired a Wall Street Journal story last March that questioned options-granting patterns at six companies, including Comverse, and sparked the federal and regulatory investigations.

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