CEO Trade Timing and Managerial Talent

41 Pages Posted: 8 Dec 2008 Last revised: 23 Feb 2018

See all articles by Amir Rubin

Amir Rubin

Simon Fraser University (SFU) - Beedie School of Business; Interdisciplinary Center (IDC) Herzliyah

Alexander Vedrashko

Simon Fraser University - Beedie School of Business

Date Written: February 19, 2018

Abstract

The paper finds that CEOs time their trades in their own company’s stock better than the average investor. While this could suggest that CEOs take advantage of their access to nonpublic information at the shareholders’ expense, trade timing can be a desirable CEO characteristic for investors if it reflects CEOs’ overall ability and is therefore associated with managerial talent. We find that CEOs who time their trades better than their peers demonstrate superior performance in running their firms, are employed by companies with better corporate governance, receive greater compensation, and have longer tenure with their firms. Overall, CEO trade timing is an observable characteristic that can be used by investors and corporate boards to identify talented managers.

Keywords: CEO Talent; Executive Compensation; Governance; Insider Trading; Trade Timing

JEL Classification: G11; G14

Suggested Citation

Rubin, Amir and Vedrashko, Alexander, CEO Trade Timing and Managerial Talent (February 19, 2018). Available at SSRN: https://ssrn.com/abstract=1311590 or http://dx.doi.org/10.2139/ssrn.1311590

Amir Rubin (Contact Author)

Simon Fraser University (SFU) - Beedie School of Business ( email )

8888 University Drive
Burnaby, British Colombia V5A 1S6
Canada

Interdisciplinary Center (IDC) Herzliyah ( email )

P.O. Box 167
Herzliya, 46150
Israel

Alexander Vedrashko

Simon Fraser University - Beedie School of Business ( email )

Beedie School of Business
8888 University Dr.
Burnaby, British Columbia V5A1S6
Canada
778-782-3471 (Phone)

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