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

See all articles by Ehsan H. Feroz

Ehsan H. Feroz

University of Washington, Milgard School of Business-Accounting ; University of Illinois at Urbana-Champaign; Government of the United States of America - US GAO Advisory Council; University of Minnesota, Labovitz School of Business-Department of Accounting; University of Minnesota, Carlson School of Management-Department of Accounting; American Accounting Association

Robert L. Hagerman

affiliation not provided to SSRN

Date Written: July 23, 2008

Abstract

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

Feroz, Ehsan H. and Hagerman, Robert L., Management Compensation, Insider Trading, and Lobbying Choice: The Case of R&D (July 23, 2008). Australian Journal of Management, Vol.15, No. 2, pp. 297-314, December 1990, Available at SSRN: https://ssrn.com/abstract=1170583

Ehsan H. Feroz (Contact Author)

University of Washington, Milgard School of Business-Accounting ( email )

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Government of the United States of America - US GAO Advisory Council ( email )

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University of Minnesota, Labovitz School of Business-Department of Accounting ( email )

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University of Minnesota, Carlson School of Management-Department of Accounting ( email )

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American Accounting Association ( email )

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Robert L. Hagerman

affiliation not provided to SSRN ( email )

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