Insider Trading Restrictions and Top Executive Compensation
David J. Denis
University of Pittsburgh
Virginia Tech - Pamplin College of Business
April 8, 2013
Journal of Accounting and Economics, Forthcoming
American Finance Association, AFA 2010 Atlanta Meetings
The use of equity incentives is significantly greater in countries with stronger insider trading restrictions, and these higher incentives are associated with higher total pay. These findings are robust to alternative definitions of insider trading restrictions and enforcement, and to panel regressions with country fixed effects. We also find significant increases in top executive pay and the use of equity-based incentives in the period immediately following the initial enforcement of insider trading laws. We conclude that insider trading laws are one channel through which cross-country differences in pay practices can be explained.
Number of Pages in PDF File: 59
Keywords: insider trading restrictions, executive compensation, insider ownership
JEL Classification: G18, G32, G34
Date posted: August 14, 2011 ; Last revised: September 17, 2013
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