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M. P. Narayanan, Cindy Schipani and H. Nejat Seyhun
  M.P. Narayanan, Cindy Schipani and
H. Nejat Seyhun
 

Backdating Costs Shareholders Hundreds of Millions

9/15/2006 --

As the Senate wraps up its hearings on stock options backdating, new research from the University of Michigan's Ross School of Business finds that shareholders of companies under SEC investigation have lost about $500 million per firm. This translates to an average loss to shareholders of about 8 percent. In contrast, the average potential gain from backdating to executives at these companies is about $600,000 per firm annually from 2000 to 2004.

"The executives appear to be betting sizeable amounts of their shareholders' money for relatively small benefits to themselves," say researchers H. Nejat Seyhun, M.P. Narayanan and Cindy Schipani.

Read The Economic Impact of Backdating of Executive Stock Options, forthcoming in the Michigan Law Review, June 2007.

Listen to Seyhun and Narayanan explain backdating and other forms of stock option "dating games" played by top executives.



For more information, contact:
Bernie DeGroat
Phone: (734) 936-1015 or 647-1847
E-mail: bernied@umich.edu