Management Compensation, Insider Trading, and Lobbying Choice: The Case of R&D
Australian Journal of Management, Vol.15, No. 2, pp. 297-314, December 1990
12 Pages Posted: 25 Jul 2008 Last revised: 20 Feb 2018
Date Written: July 23, 2008
In this study, we examine the relationships between lobbying choices and insider trading behavior by managers before and after the issuance of the 1974 FASB Exposure Draft on R&D. Our results indicate that managers compensated by accounting-based schemes lobbied against the FASB Exposure Draft on R&D and sold shares of their firms, while managers compensated by market based schemes lobbied for and bought shares of their firms. These results provide additional evidence that managers' lobbying choices can act as a surrogate for their beliefs as reflected in their insider trading behavior.
Keywords: Management compensation, Insider trading, Lobbying, FASB, R&D, Political Economy
JEL Classification: G1,G3, L51, M4
Suggested Citation: Suggested Citation