Abstract：
This paper investigates the managers’ manipulation on exercise price. The managers manipulate exercise price by timing the announcement of stock option plan draft, which induces the decrease of stock price before the announcement and the increase after that. Furthermore, the tendency of manipulated exercise price is stronger when the managers obtain more stock options and the corporate governance is weaker. The manipulated exercise price leads to negative economic consequence by decreasing 24 months and 36 months long-term shareholder wealth for more than 20%, 25% respectively.
2014 
