U.S. Probe Into Stock Options May Widen
Los Angeles Times
July 16-17
More than 2,200 U.S. companies may have manipulated the timing of stock option grants to executives between 1996 and 2005, said a study by researchers whose work set off the current wave of federal investigations.
The study, released Saturday (July 15), found that 23 percent of all option grants from 1996 to Aug. 29, 2002, when the U.S. Securities and Exchange Commission tightened reporting regulations, were backdated or timed to coincide with low share prices. That would enrich executives by creating a built-in profit on options. Since the new SEC rules were implemented, the study said, about 10 percent of grants were manipulated. The findings might expand the biggest U.S. investigation of corporate wrongdoing since the probe into improper mutual-fund trading three years ago resulted in $4.3 billion in penalties.
The authors--Randall Heron at the Kelley School of Business at Indiana University and Erik Lie of the Henry B. Tippie College of Business at the University of Iowa--examined 7,774 companies and 39,888 stock option grants dated between Jan. 1, 1996, and Dec. 1, 2005.
Read this story at: http://www.latimes.com/news/printedition/asection/la-na-options16jul16,1,6138926.story?coll=la-news-a_section&ctrack=1&cset=true
To learn more about Heron, visit this site: http://kelley.iupui.edu/faculty/Directory.cfm?netid=rheron
To learn more about IU's Kelley School of Business, visit this site: http://www.kelley.iu.edu/
