News & Events

Lie Research Noted in Bogle Book Review

A review of the book "The Battle for the Soul of Capitalism" by Vanguard Management and index mutual fund inventor John Bogle notes that the book rails against corporate fraud and the executives who perpetrate it. The reviewer, James Lardner, notes that since the publication of Bogle's book executives and directors of more than 250 companies have come under suspicion of profiting from fraudulently timed stock option grants. The whistle was blown by ERIK LIE, a professor of finance at the University of Iowa. Through statistical analysis, he established a pattern that could not be explained by chance, thus giving new meaning to the term "probable cause." His 2005 paper "On the Timing of CEO Stock Option Awards" prompted investigations by The Wall Street Journal and eventually the Justice Department and the Securities and Exchange Commission; their objective, however, was to prove what Bogle might consider a minor point, for, in his mind, stock options were a scam to begin with.


Return to top of page