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Lie: Executives Cherry-Picked Stock Buy Dates

A story about the stock backdating scandal says the first hints were seen in 1997, when David Yermack, now a professor of finance at New York University, planted the first germs of suspicion by noting the lucky timing of the average executive options grant, which appeared to come just before a strong rally in a company's share price. As options grants became a more central plank of executive pay during the dot.com years, these coincidences became more frequent and striking. By the time ERIK LIE, associate professor at the University of Iowa, compiled statistics on the subject in 2003, he could come up with only one conclusion. "The odds of executives being able to predict a rally in the share price over the next few days after a grant were simply astronomical. I thought it was clear they were cherry-picking dates from the past." The Independent is based in Great Britain.


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