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Lie Options Backdating Study Noted

Backdating may not be yesterday's news after all. Investor reaction has been muted despite a string of criminal indictments and high-profile resignations. After all, stockholders reasoned, the practice was a legacy of the 1990s stock-market bubble, wiped out by the 2002 passage of aggressive corporate reforms that significantly sped up how quickly companies must report stock-options grants. Across the board, compliance is improving with the Sarbanes-Oxley Act, which since August 2002 has forced companies to report options grants to officers and directors within two days rather than 45 days after the close of the fiscal year. A July study from Professors ERIK LIE of the University of Iowa and Randy Heron of Indiana University showed the percentage of options grants filed late declined from 22 percent of grants in 2002 to 13 percent of grants in 2005.

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