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Lie's Research Leads To Corporate Boards Study

Nearly 1,400 corporate board members appear to have profited from the manipulation of stock option grant dates over a 10-year period, according to a study being released today. The analysis raises the possibility that hundreds of board members were aware that options were backdated to boost their value to themselves and company executives. That could be seen as a conflict with their role as advocates for all company shareholders. The backdating scandal emerged this year after academic research by ERIK LIE of the UNIVERSITY OF IOWA, leading to resignations and investigations at scores of companies. Lie said the new study underscored the important role directors should play in guarding against management abuses. "It's hard for shareholders to understand what's going on in a company because you can't be there," Lie said. "That's why you delegate the responsibility to a few people, the directors, who represent you. You have to have trust in those people and they have to act in a trustworthy manner."

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