Friday, July 21, 2006

Greedy Guts

(Wait, have I used that title before?)

My first "career" was in the scientific/academic world. After 10 years I became disgusted with the rotten inards of that branch of human edeavor, its internal politics run amok and its integrity long-since sold off for government/pharma funding. By its very nature it tries to leach off of the thirst that young (all) people have for knowledge. Disgusting.

When I ventured into the world of corporations, whoa boy, much worse, as the Wiskey and Gunpowder guys (an interesting free newsletter BTW) point out. I sure wish I could back date my own stock options - I coulda made a lotta money dat way - duh!

“Erik Lie, a University of Iowa business professor whose work helped fuel regulatory inquiries into backdating, is expected to release fresh research this weekend showing anomalies that suggest a huge cohort of companies may have played games with their options grants. In his new research paper, which analyzes options prices and share movements, Dr. Lie estimates that 29% of the nearly 8,000 firms studied had backdated or otherwise manipulated grants to top executives at some point between 1996-2005.

“The paper, authored by Dr. Lie and Randall Heron of Indiana University’s business school, examined almost 40,000 grants during that period. It found evidence of manipulation involving 23% of those grants between 1996-2002, when a new rule required executives to report grants within two business days of receiving them -- making backdating far more difficult to achieve. Afterward, the number of suspicious grants dropped in half.

“‘This scandal is much bigger than what we currently are seeing in the media -- though it looks pretty big in the media,’ Dr. Lie says.” (read more)

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