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Lie's 2005 Research Paper Examined Backdating

Investors' faith in corporate accounting again is under siege. Over the last few months, more than 50 companies - most of them technology firms - have disclosed that they were under investigation by federal authorities for possibly manipulating executives' stock option grants to boost the potential payoffs. The possibility of widespread backdating of option awards was proposed by ERIK LIE, an associate professor with the University of Iowa's college of business, in a May 2005 research paper. He looked at nearly 6,000 option awards from 1992 through 2002, using company disclosure reports filed with the Securities and Exchange Commission. What he found, Lie said, was a pattern of abnormally large stock price gains immediately after unscheduled option grants - those that weren't awarded at the same time each year.


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