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Insider Trading Restrictions and Top Executive CompensationDavid J. DenisUniversity of Pittsburgh Jin XuPurdue University - Krannert School of Management April 8, 2013 Journal of Accounting and Economics, Forthcoming American Finance Association, AFA 2010 Atlanta Meetings Abstract: 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 Accepted Paper SeriesDate posted: August 14, 2011 ; Last revised: April 21, 2013Suggested CitationContact Information
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