News & Events

Lie: Sarbanes Oxley Having An Impact

Under the Sarbanes-Oxley Act passed in the wake of scandals at Enron and WorldCom, companies must notify federal regulators about option grants within two days. The previous 45-day window gave companies the opportunity to grant options and then go back to pick prices right before a run-up in the stock. Sarbanes-Oxley is having an impact. Before its reforms were enacted, executives missed the deadline by nearly 20 weeks, Seyhun said. The average lag dropped from 18 business days in the first five months after Sarbanes-Oxley was enacted to eight days in 2004. "We're getting on the right track. It's going down," said ERIK LIE, a finance professor at the University of Iowa who reached similar conclusions as the Michigan researchers in a separate study he co-wrote. "That's not a trivial number, in my mind. That's one of 10 grants." The story also appeared on the Web site of the BRADENTON (Fla.) HERALD.

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