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Strategic News Releases in Equity Vesting MonthsAlex EdmansLondon Business School - Institute of Finance and Accounting; European Corporate Governance Institute (ECGI); Centre for Economic Policy Research (CEPR) Luis Goncalves-PintoNational University of Singapore Yanbo WangINSEAD Moqi Groen-XuLondon School of Economics & Political Science (LSE) May 14, 2015 NBER Working Paper No. w20476 European Corporate Governance Institute (ECGI) - Finance Working Paper No. 440/2014 Abstract: We show that CEOs reallocate news releases into months in which their equity vests, and away from prior and subsequent months. CEOs release 7% more discretionary news in vesting months than in prior months, but there is no di fference for non-discretionary news. These vesting months are determined by equity grants made several years prior, and thus unlikely driven by the current information environment. Discretionary news releases in vesting months lead to favorable media coverage, suggesting they are positive in tone. They also generate a temporary run-up in stock prices and market liquidity, which the CEO exploits by cashing out shortly afterwards.
Number of Pages in PDF File: 50 Keywords: Voluntary Disclosure, Equity Vesting, CEO Incentives, News JEL Classification: G14, G34 Date posted: August 30, 2014 ; Last revised: February 16, 2016Suggested CitationContact Information
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