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Some Observations On The Stock Option Backdating Scandal Of 2006, David I. Walker
Some Observations On The Stock Option Backdating Scandal Of 2006, David I. Walker
Faculty Scholarship
The corporate stock option backdating scandal has dominated business page headlines during the summer of 2006. The SEC is currently investigating more than seventy-five companies with respect to the timing and pricing of stock options granted during the boom years of the late 1990s and early 2000s, and the number of firms caught up in the scandal seems to increase every day. This essay contributes to our understanding of the backdating phenomenon by analyzing the economics of backdating and the characteristics of the firms under investigation. Its main points are the following: First, given the high volatilities of the stocks …