Backdating has cost $100 billion study says

Shareholders of stock in companies caught up in the backdating scandal have lost at least $100 billion, by one measure, since backdating was first covered in The Wall Street Journal, according to an academic study released Wednesday.

The study measured the performance of 110 stocks in a Journal database of companies with backdating problems. The study measured the stocks’ daily returns versus the returns that would have been expected based on the stocks’ historical correlation to the wider market.

Stocks in the Journal’s database of companies with backdating problems began losing value after a May 2005 academic study by Erik Lie at the University of Iowa first raised the issue. Wednesday’s study said the stocks, on average, declined more than 15 percent compared with their expected returns during the four weeks leading to the Journal’s first article about backdating, in March 2006.

For Subscribers

FOR SUBSCRIBERSAbdul El-Sayed tries to woo MAHA voters as Democrats seek inroads with RFK’s supporters

FOR SUBSCRIBERSKratom-like substances are popping up in a typically benign supplement

FOR SUBSCRIBERSGOP super PAC increases its spending for Sen. Jon Husted in tough Ohio race

FOR SUBSCRIBERSRecords reveal tumultuous marriage between slain New York Times executive and wife

FOR SUBSCRIBERSFrom clean energy warrior to ‘wall of shame,’ James Talarico reverses on a fossil fuel money pledge

FOR SUBSCRIBERSCongressional staff planned official trip with luxury stops in Italy and France weeks before election

FOR SUBSCRIBERSA harrowing ordeal aboard an Israel-bound plane

FOR SUBSCRIBERSOpenAI CEO Sam Altman to skip congressional hearing on rogue AI agents

FOR SUBSCRIBERSKey DOJ lawyers departed Trump ‘grand conspiracy’ probe amid pressure to produce, source says

FOR SUBSCRIBERSTrump’s new AI chatbot often links to a site launched under Clinton 26 years ago

FOR SUBSCRIBERSAt MAHA summit, industry CEOs the movement once vilified take the stage

FOR SUBSCRIBERSThis Paralympian has two goals: Win medals and give away $500,000 to her teammates

FOR SUBSCRIBERSCornell rape allegation spotlights stringent New York state laws that have long drawn criticism

FOR SUBSCRIBERSThe debate over AI’s future rages on both coasts

FOR SUBSCRIBERSDecades-old march dispute reignites in Northern Ireland, threatening political crisis

Investors anticipated “with remarkable accuracy exactly which companies would later prove to have deep legal problems regarding options,” the study said.

Options give the recipient a right to buy a stock at a fixed “strike price,” generally set at the stock’s market price the day of the grant, and options holders benefit if the stock rises above the strike price. In the backdating scandal, executives and directors dated option grants on days when the stock was at a low, enhancing the potential benefit.

For Subscribers

FOR SUBSCRIBERSAbdul El-Sayed tries to woo MAHA voters as Democrats seek inroads with RFK’s supporters

FOR SUBSCRIBERSKratom-like substances are popping up in a typically benign supplement

FOR SUBSCRIBERSGOP super PAC increases its spending for Sen. Jon Husted in tough Ohio race

FOR SUBSCRIBERSRecords reveal tumultuous marriage between slain New York Times executive and wife

FOR SUBSCRIBERSFrom clean energy warrior to ‘wall of shame,’ James Talarico reverses on a fossil fuel money pledge

FOR SUBSCRIBERSCongressional staff planned official trip with luxury stops in Italy and France weeks before election

FOR SUBSCRIBERSA harrowing ordeal aboard an Israel-bound plane

FOR SUBSCRIBERSOpenAI CEO Sam Altman to skip congressional hearing on rogue AI agents

FOR SUBSCRIBERSKey DOJ lawyers departed Trump ‘grand conspiracy’ probe amid pressure to produce, source says

FOR SUBSCRIBERSTrump’s new AI chatbot often links to a site launched under Clinton 26 years ago

FOR SUBSCRIBERSAt MAHA summit, industry CEOs the movement once vilified take the stage

FOR SUBSCRIBERSThis Paralympian has two goals: Win medals and give away $500,000 to her teammates

FOR SUBSCRIBERSCornell rape allegation spotlights stringent New York state laws that have long drawn criticism

FOR SUBSCRIBERSThe debate over AI’s future rages on both coasts

FOR SUBSCRIBERSDecades-old march dispute reignites in Northern Ireland, threatening political crisis

The study was conducted by Gennaro Bernile at the University of Miami; Gregg Jarrell, former chief economist of the Securities and Exchange Commission and now an economics professor at the University of Rochester; and Howard Mulcahey, vice president of Forensic Economics Inc., an economics and finance consulting practice in Rochester, N.Y.

A list of companies with backdating problems compiled by The Associated Press is longer than the database in the study. As of Dec. 19, the AP has found at least 195 companies that have disclosed federal or internal investigations into backdating.