How much will the options scandal cost shareholders?

You could argue the costs of the options scandal in many ways. The only study on this issue was released recently by three University of Michigan researchers. They found that the average pay of an executive with backdated options was boosted by $600,000, while the ensuing decline in the stock knocked $500 million of the market cap of each firm involved. One could quibble with the methodology and assumptions. But the study bolsters the case that lots of costs are involved, from higher legal fees to extra taxes, from flagging stocks to possible payments for settling class action suits. The study's release was timed to coincide with Congressional hearings. It may yet end up an issue in the upcoming elections.

For more on the study: 
- Here's a New York Times article

And here's an article on the growing ranks of companies under investigation.