Survey: ESOP Companies Experienced Five-Year Stock Growth

  

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Looking at the days around the announcement of the backdating problem at a company, stock prices dropped seven percent below the market-adjusted expected price, and stayed that way for several weeks afterwards. Looking over a one-year period after the Wall Street Journal story opened the backdating controversy, normalized returns for a portfolio of scandal-tainted companies dropped between 15% and 20%, depending on what comparison benchmarks are used... Judgments in the settled cases, for instance, have averaged 1.5% of pre-scandal market capitalization in class action suits and .23% in shareholder derivative suits (a very difficult kind of suit to win).