IPO Firm Executives, Compensation, and Selling

Journal of Entrepreneurial Finance and Business Ventures, Vol. 11, No. 1, 2006

Posted: 13 Jan 2009

See all articles by Jaemin Kim

Jaemin Kim

Fowler College of Business

Kuntara Pukthuanthong

University of Missouri, Columbia

Date Written: January 13, 2009

Abstract

IPO firm executives are significant net sellers in the year immediately following the IPO year. Two significant variables affecting their sales are the number of stock options exercised during the year and the number of shares held at the end of the preceding year. Contrary to the findings of the previous studies, the number of stock options and the number of restricted stocks turn out to be insignificant. The evidence suggests that IPO executives sell mainly to realize a significant part of their undiversified wealth; however, they do not sell to explicitly hedge against stock option grants or to exploit potential overvaluation.

Keywords: Stock Option, Restricted Stock, Initial Public Offering

JEL Classification: G30, G32, G39

Suggested Citation

Kim, Jaemin and Pukthuanthong, Kuntara, IPO Firm Executives, Compensation, and Selling (January 13, 2009). Journal of Entrepreneurial Finance and Business Ventures, Vol. 11, No. 1, 2006. Available at SSRN: https://ssrn.com/abstract=1326769

Jaemin Kim

Fowler College of Business ( email )

San Diego State University
5500 Campanile Drive
San Diego, CA 92182-8236
United States
619-594-2721 (Phone)

Kuntara Pukthuanthong (Contact Author)

University of Missouri, Columbia ( email )

Robert J. Trulaske, Sr. College of Business
403 Cornell Hall
Columbia, MO 65211
United States
6198076124 (Phone)

HOME PAGE: http://https://kuntara.weebly.com

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