A new study by University of Michigan researchers concludes that investors have incurred significant losses at companies that have been accused of backdating executive stock options.

The researchers analyzed 48 firms that have been implicated in backdating and found that investors lost an average of 8 percent in market value (or $510 million per firm) during the 21 days around the disclosure of backdating allegations, according to Compliance Week. At most of these firms, the losses far outweighed the potential gains ($600,000 per company on average) that executives and directors could have received from backdating options. (The study didn't look at the potential gains that employees might have received from backdated options.)

"For a small gain to themselves, [executives are] putting their shareholders at huge risk," M.P. Narayanan, one of the study's authors, told Compliance Week. "Shareholders might have been better off if executives just asked for more money."

At those 48 companies, investors suffered abnormally negative returns at 35 firms, the researchers found. The most significant (market-adjusted) declines were at Vitesse Semiconductor (57 percent) and Jabil Circuit (31 percent).

The researchers also found that most of the investor losses (5 percentage points of the average 8 percent drop) occurred in the nine days before the first public disclosure of backdating accusations. According to the study authors, "this finding suggests that some insiders or hedge funds may be receiving word of the likely filing of backdating complaints and either selling or shorting the stock in advance."

The study may prompt some lawyers for investors to investigate their potential client losses in the weeks prior to the first public disclosure, rather than base their claims on a date right before the public disclosure, C. Hunter Wiggins, a partner with Sonnenschein Nath & Rosenthal, told Compliance Week.

"If a huge stock price drop occurred before the public disclosure price, plaintiffs' attorneys might try to use a date earlier than the traditional date immediately before public disclosure," Wiggins said. "They won't want to leave 75 percent of the damages on the table."

Bloomberg News estimates that investors collectively have lost $7.9 billion in market value from the option-timing scandal. Of the 117 firms that announced option investigations before Aug. 31, two-thirds suffered market value declines the next day, which averaged 2.6 percent.

Some investors have chosen to file derivative lawsuits against corporate officers and directors after concluding that they had not suffered sufficient investment losses from alleged option manipulation to mount a viable class-action case. So far, 17 companies have been hit with securities class actions over option grants, according to SCAS data. Meanwhile, more than 80 companies now face derivative lawsuits arising from their option practices, according to The D&O Diary, a Web log maintained by Kevin LaCroix of OakBridge Insurance Services.