The Institute for Operations Research and the Management Sciences (INFORMS®) today congratulated Prof. Erik Lie, author of a key study on backdated CEO stock options, and Prof. Wallace J. Hopp, Editor-in-Chief of the journal Management Science. Prof. Lie was named one of Time Magazine’s 100 most influential people in the world. His study, which appeared in Management Science, was the basis of reporting that earned a 2007 Pulitzer Prize for The Wall Street Journal.
"As these two recognitions attest, Prof. Lie’s use of operations research laid the groundwork for a unique application of justice in the marketplace," wrote Mark Doherty, Executive Director of INFORMS, and Brenda Dietrich, President of the association. "We’re proud that Prof. Lie’s work in our field has won him this appreciation."
Writing in Time Magazine about Prof. Lie, New York Governor Eliot Spitzer explained, "Lie's findings, which he delivered to the SEC, reinforce the concept that the successful functioning of our markets depends as much on the resolve of researchers, whistle-blowers and regulators as it does on the work of CEOs. It is immensely important that Lie's chosen path of academia affords him the tools to analyze and assess our economy in a dispassionate, unbiased way. It is even more important that Lie is fostering the curiosity of a new generation of minds and teaching them to puzzle out how the world works."
The Wall Street Journal won the Pulitzer Prize "for its creative and comprehensive probe into backdated stock options for business executives that triggered investigations, the ouster of top officials and widespread change in corporate America."
The reporting was based, in part, upon a study, "On the Timing of CEO Stock Option Awards," suggesting that "at least some of the awards are timed retroactively," that Prof. Hopp included in the May, 2005 issue of Management Science. After reading the study, the Journal asked Prof. Lie to generate a list of companies that made stock option grants which were followed by large gains in stock price.
The reporters used the list to shed light on executives at major companies. Their stories, in the words of a Journal article, "probed the practice of backdating at corporations from UnitedHealth Group Inc. to Apple Inc. The stories fueled federal investigations of more than 140 companies. At least 70 top executives have lost their jobs and 10 former executives are facing federal or state criminal charges in the backdating scandal."
"Not any more. The unassuming academic, who first came to the U.S. as a student in 1988, suddenly has become a minor celebrity in the financial world, thanks to a paper he published [in Management Science] last year."
Prof. Lie is Associate Professor of Finance and Henry P. Tippie Research Fellow at the Henry P. Tippie College of Business, University of Iowa. Prof. Hopp is Director, Master of Management in Manufacturing Program, at the Robert R. McCormick School of Engineering and Applied Science, Northwestern University.
About INFORMS
The Institute for Operations Research and the Management Sciences (INFORMS®) is an international scientific society with 10,000 members, including Nobel Prize laureates, dedicated to applying scientific methods to help improve decision-making, management, and operations. Members of INFORMS work in business, government, and academia. They are represented in fields as diverse as airlines, health care, law enforcement, the military, financial engineering, and telecommunications. The INFORMS website is www.informs.org. More information about operations research is at www.scienceofbetter.org.
INFORMS journals are strongly cited in Journal Citation Reports, an industry source. In the JCR subject category "operations research and management science," Management Science ranked in the top 10 along with two other INFORMS journals.
The special MBA issue published by Business Week includes Management Science and two other INFORMS journals in its list of 20 top academic journals that are used to evaluate business school programs. Financial Times includes Management Science and four other INFORMS journals in its list of academic journals used to evaluate MBA programs.