News & Events

Lie: Statistically Improbable Option Grants Not Backdated

A Q&A on the growing scandal over the practice of backdating stock options says that ERIK LIE, a finance professor at the University of Iowa's College of Business, has evaluated thousands of option grants and found that it was statistically improbable for them not to have been backdated at many companies. A paper that Lie and Randall Heron, an associate professor at Indiana University's business school, published on July 14 estimates that 18.9 percent of unscheduled grants to top executives from 1996 through 2005 were backdated or manipulated. The pair estimates that 29.2 percent of firms manipulated grants to top executives at some point between 1996 and 2005. A version of the story also ran on the Website ZDNET.COM.

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