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Strategic News Releases in Equity Vesting Months

51 Pages Posted: 30 Aug 2014 Last revised: 16 Sep 2017

Alex Edmans

London Business School - Institute of Finance and Accounting; European Corporate Governance Institute (ECGI); Centre for Economic Policy Research (CEPR)

Luis Goncalves-Pinto

Chinese University of Hong Kong - Department of Finance

Moqi Groen-Xu

London School of Economics & Political Science (LSE)

Yanbo Wang

Sungkyunkwan University; INSEAD

Multiple version iconThere are 3 versions of this paper

Date Written: January 6, 2017

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

Edmans, Alex and Goncalves-Pinto, Luis and Groen-Xu, Moqi and Wang, Yanbo, Strategic News Releases in Equity Vesting Months (January 6, 2017). NBER Working Paper No. w20476; European Corporate Governance Institute (ECGI) - Finance Working Paper No. 440/2014. Available at SSRN: https://ssrn.com/abstract=2489152 or http://dx.doi.org/10.2139/ssrn.2489152

Alex Edmans

London Business School - Institute of Finance and Accounting ( email )

Sussex Place
Regent's Park
London NW1 4SA
United Kingdom

European Corporate Governance Institute (ECGI) ( email )

c/o ECARES ULB CP 114
B-1050 Brussels
Belgium

Centre for Economic Policy Research (CEPR) ( email )

77 Bastwick Street
London, EC1V 3PZ
United Kingdom

Luis Goncalves-Pinto (Contact Author)

Chinese University of Hong Kong - Department of Finance ( email )

Cheng Yu Tung Building
Shatin
Hong Kong
Hong Kong

Moqi Groen-Xu

London School of Economics & Political Science (LSE) ( email )

Houghton Street
London, WC2A 2AE
United Kingdom

Yanbo Wang

Sungkyunkwan University ( email )

53 Myeongnyun-dong 3-ga Jongno-ju
Guro-gu
Seoul, 110-745
Korea, Republic of (South Korea)

INSEAD ( email )

Boulevard de Constance
F-77305 Fontainebleau Cedex
France

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