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Stock option backdating wall street journal

The backdating problem was first highlighted by Professor Erik Lie of the University of Iowa, who published his initial study in 2004.Professor Lie concluded that the robust profitability of so many options was statistically impossible absent some artificial influence such as backdating.

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Exercising them after it has reached $50 would bring a profit of $20 times 100,000, or $2 million.Fifty-two companies currently under criminal investigation. Moreover, the company avoids having to expense the options as current compensation, thus increasing earnings in the near term. As a consequence, the option is immediately profitable, or “in the money,” to the option holder.Under previous regulations, corporations could wait 45 days or, in some cases, over a year to report options, thus providing ample time for backdating.Other similar practices are being reviewed by government officials as well.According to the Alliance for Audited Media, the Journal had a circulation of about 2.4 million copies (including nearly 900,000 digital subscriptions) as of March 2013, and derives its name from Wall Street in the heart of the Financial District of Lower Manhattan.

The Journal has been printed continuously since its inception on July 8, 1889, by Charles Dow, Edward Jones, and Charles Bergstresser.

Among corporations involved in the 2006 stock-option backdating scandal, those implicated earlier were more likely to dismiss their top executives than those that surfaced later on, according to new research from Rice University and the University of California, Irvine.

The researchers examined the behavior of corporate boards following the 2006 stock-option backdating scandal, in which firms illegally manipulated stock-option grant dates.

Or did a lot of CEOs just have amazingly good luck?

A stock option gives the recipient the right to purchase stock at a set price.

Zhang hopes their research can help stakeholders and the general public better understand how corporate boards respond to scandal.