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Lie Study Uncovered Options Backdating

Options backdating is a brand new way to get executive compensation off the balance sheet. The detective work about backdating began with ERIC LIE, a finance professor from the University of Iowa who has studied options grants. In a 2005 paper, Lie observed that a remarkable number of options seemed to have been granted when the stock price was very low, thus giving the recipients huge upside. This could be due to luck, but Lie calculated that the odds against picking the price troughs so consistently was truly astronomical.

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