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Lie Stock Option Research Noted

New research by Securities and Exchange Commission economist David Cicero suggests that some executives may have cut their income-tax burden by pretending their options were exercised on a prior day, when the company's stock was trading at a lower price. "The Cicero paper appears to be very well done," said David Yermack, a finance professor at New York University's Stern School of Business who has studied options issues. "It's strong evidence that executives were manipulating their exercise dates, similar to the way they were manipulating their award dates." Yermack said he also has been studying the issue, along with ERIK LIE of the University of Iowa and Randall Heron, of the University of Indiana. Messrs. Lie and Heron are widely credited with the first academic research that suggested backdating of option grants could be widespread.


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