Study: 1 Of 4 Option Grants Are Backdated

In the decade between 1996 and 2005, 23% of U.S. companies – more than 2,200 – backdated or manipulated the timing of option grants to give executives lower share prices, according to two researchers.

In the decade between 1996 and 2005, 23% of U.S. companies – more than 2,200 – backdated or manipulated the timing of option grants to give executives lower share prices, according to two researchers. The study’s authors, Randall Heron of Indiana University’s Kelley School of Business and Erie Lie of the University of Iowa’s Henry B. Tippie College of Business, found that option-timing was more prevalent at smaller firms, technology companies and firms with volatile stock prices. Damon Silvers, associate general counsel of the AFL-CIO, told Bloomberg News that the study indicates that the Securities and Exchange Commission has “to be clear in its intention to deal with this from both a regulatory and enforcement perspective.”