Lie Study Revealed Back-dating Scandal
Bookmark & ShareJuly 25, 2006
The stock options backdating scandal seems like it's growing every day. Dozens of companies have voluntarily disclosed that their stock option grants are under investigation, and the U.S. Securities and Exchange Commission said last week that it has targeted more than 80 firms so far. But that's just the "tip of the iceberg," according to former SEC Chairman Harvey Pitt. Speaking in a live Forbes.com chat Monday afternoon, Pitt noted that there are 17,000 public companies, and the backdating scandal will probably implicate far more than 80 of them before it has run its course. Indeed, a new study estimates that 29.2 percent of firms manipulated grants to top executives between 1996 and 2005. The paper, by ERIK LIE at the University of Iowa and Randall A. Heron at Indiana University, found that technology companies, small firms and companies with volatile stock prices were most likely to backdate their option grants.
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