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Erik Lie's Research Launched Backdating Scandal

Stock options helped fuel the dot-com boom, but the business "drug of choice" proved to have problematic side effects. ERIK LIE, an associate professor of finance at the University of Iowa, did a detailed research study of proxy statements for every company on the Standard & Poor's 500. Lie found a correlation between when stock prices fell and stock option grant dates, leading him to conclude that backdating was indeed often an intentional quest for financial gain. He said a pattern emerged in the data whereby stock prices were lower right before stock option grant dates and higher afterward, leading Lie - and the SEC, which used his data - to conclude manipulation of dates. Lie's work kicked off the government investigations. The Argus is published in California.

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