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Lie Says Backdating Scandal Has No Clear Villain

Across the U.S., the backdating of option grants -- an intentional manipulation meant to inflate their value -- has touched nearly 200 companies and cost dozens of executives their jobs. And yet, despite the stunning breadth of the abuses, the issue hasn't generated nearly the same sort of public frenzy that surrounded earlier cases of corporate malfeasance, like Enron, Worldcom and Tyco. Backdating became especially popular during the tech boom of the late 1990s when companies couldn't entice top employees with big cash, but did have fast-growing stocks. Backdating has since been uncovered at all kinds of companies. In fact, the scandal is probably 10 times bigger than anyone thinks, says ERIK LIE, a finance professor at the UNIVERSITY OF IOWA whose research first brought the issue to public attention. Lie says the scandal has been somewhat diluted by the fact that there is no central character to easily cast as the villain. It's not like "when you have Ken Lay and Jeff Skilling in the middle," he says. Backdating is a scandal without plot or personal tragedy -- just billions of dollars of company money skimmed by hundreds of executives. Macleans is a Canadian magazine.

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