The Dating Game, by James Surowiechi, The New Yorker: ..
When news broke, earlier this year, that some companies had backdated stock-option grants ...
in order to make them more valuable, it seemed like a problem that would come and go quickly... What’s distinctive about this one is that the benefits companies got from backdating were so small.
Never, you might say, have so many cheated so much to gain so little.
They played games with their accounting because they thought investors weren’t smart enough to look at the fundamentals.
They were “managing earnings,” massaging the numbers, something that many (perhaps most) companies do in some form or other...
Day 90 refers to 90 business days after the reported option grant date.  These returns are adjusted for the market movements. Burcu Avci, visiting scholar at the University of Michigan, Cindy A. Waterman Collegiate Professor of Business Administration and Professor of Business Law, and H.
As the graph shows, stock prices still do not appear to move randomly around option grants.
As it happens, companies are perfectly free to issue options priced below the current market: those are called “in the money” options, and they’re worth something right when they’re issued. But there’s a rule that companies have to follow when they issue “in the money” options: they have to disclose it in their financial statements. Unless executives can time-travel, though, it’s hard to make that case for backdated options.
Our data set contains over one million option grants during 2008-2014.
As shown above, the data provides evidence of manipulation by executives for surreptitious personal gain on a broad scale.
Under our proposal, executives would no longer significantly benefit from the timing games documented in our study.
A regulation along the lines of our proposal should go a long way toward eradicating this illicit, self-serving behavior, supporting the intent of federal securities laws and state fiduciary duty obligations.