Toyota has agreed to pay $25.5 million to shareholders who lost money after the Japanese automaker's stock price plummeted in the wake of a series of mass recalls, court records showed.

The settlement was filed hours before Toyota (IW 1000/8) announced a global recall of 2.77 million vehicles over water pump or steering problems on Wednesday, in the latest blow to the firm's reputation after a spate of earlier call backs.

The firm last month issued a huge global recall of 7.43 million vehicles, including its popular Camry and Corolla models, over a possible fire risk tied to a fault in its electric windows.

Earlier this year it added two models to a controversial 2009 recall launched after floor mats became trapped under the accelerator, which was linked to accidents that allegedly caused dozens of deaths.

Toyota's mishandling of the initial problem and other reports of sudden, unintended acceleration led to the recall of more than 12 million vehicles worldwide, a U.S. congressional probe, more than $50 million in fines from U.S. regulators and public apologies by its chief.

Toyota has since worked hard to regain its reputation for safety, while at the same time fighting off the impact of the economic crisis, a strong yen and the devastating 2011 quake-tsunami disaster.

The settlement filed in a Los Angeles court late Tuesday will compensate thousands people who purchased Toyota stock from May 10, 2005, through Feb. 2, 2010, if it is approved by a federal judge.

Lawyers for the plaintiffs said the maximum compensation they could have hoped to receive was $124 million and argued that the settlement is a fair deal.

Copyright Agence France-Presse, 2012