Erik lie option backdating Artists guilford ct

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The most culpable form of backdating involves "intentionally changing the date used to set an option's exercise price to one on which the stock's price was at a low" (Ellsworth et al., 2006).

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" In the study, Lie and another professor examined the stock price pattern surrounding option grants (i.e., the pattern that companies' stock returns were abnormally high immediately after executive stock option grants and abnormally low in the period leading up to the grants) made before and after August 29, 2002, the effective date of the SEC requirement that Forms 4 report option grants within two business days.Most companies continue with the intrinsic value based method of accounting (Ellsworth et al., 2006).Under the intrinsic value based method, "compensation cost is the excess, if any, of the quoted market price of the stock at grant date or other measurement date over the amount an employee must pay to acquire the stock" (Financial Accounting Standards Board, 1995).Because some other military actions take place at the initial stages of conflicts, which may also be targeted at escalation interventions, FDO is often differentiated from these other actions by the observance of some key principles and values.For example FDO ensures that various political, military, information and economic deterrent measures are made available to the President2.

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