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Lie: Backdating Findings 'Pretty Scary'

More than 2,000 companies appear to have used backdated stock options to sweeten their top executives' pay packages, according to a new study that suggests the practice is far more widespread than previously disclosed. An author of the study said the analysis suggested that the disclosures so far about backdated stock options may be just the tip of the iceberg. "It is pretty scary, and it's quite surprising to see," said ERIK LIE, an associate professor of finance at the Tippie College of Business at the University of Iowa. Lie said the findings were so surprising that he asked several colleagues to check his numbers. Together, they concluded that the numbers probably erred on the low side. The study by Lie and Randall Heron, of the Kelley School of Business at Indiana University, was posted to a University of Iowa Web site. The paper is based in North Carolina.

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