Guidance Software Inc., whose stock price plunged earlier this month after reporting disappointing earnings, said Monday that its directors have authorized repurchasing up to $8 million worth of its common shares.

The Pasadena-based software developer, whose products are used in digital investigations, said the share repurchase authorization is effective immediately.

“The board’s approval of this share repurchase program reflects its confidence in the long-term outlook for our business and its commitment to increase shareholder value,” said Chief Executive Victor Limongelli in a statement.

Guidance shares had dropped 39 percent after reporting Aug. 7 that its second quarter loss had increased 130 percent to $2.6 million. Analysts subsequently cut their recommendation on the stock.

The share price in mid-morning trading on the Nasdaq on Monday was up 10 cents, or 2 percent, to $6.36. Shares have fallen 52 percent since the first of the year.