Strategic News Releases in Equity Vesting Months
Review of Financial Studies (RFS), Forthcoming
European Corporate Governance Institute (ECGI) - Finance Working Paper No. 440/2014
NBER Working Paper No. w20476
Jacobs Levy Equity Management Center for Quantitative Financial Research Paper
58 Pages Posted: 30 Aug 2014 Last revised: 16 Oct 2018
There are 3 versions of this paper
Strategic News Releases in Equity Vesting Months
Strategic News Releases in Equity Vesting Months
Strategic News Releases in Equity Vesting Months
Date Written: May 30, 2018
Abstract
We find that CEOs release 20% more discretionary news items in months in which they are expected to sell equity, predicted using scheduled vesting months. These vesting months are determined by equity grants made several years prior, and thus unlikely driven by the current information environment. The increase arises for positive news, but not neutral or negative news, nor non-discretionary news. News releases fall in the month before and month after the vesting month. News in vesting months generates a temporary increase in stock prices and market liquidity, which the CEO exploits by cashing out shortly afterwards.
Keywords: Voluntary Disclosure, Equity Vesting, CEO Incentives, News
JEL Classification: G14, G34
Suggested Citation: Suggested Citation