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

52 Pages Posted: 30 Aug 2014 Last revised: 6 Jun 2018

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 (SKK) Graduate School of Business

Multiple version iconThere are 3 versions of this paper

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

Edmans, Alex and Goncalves-Pinto, Luis and Groen-Xu, Moqi and Wang, Yanbo, Strategic News Releases in Equity Vesting Months (May 30, 2018). Review of Financial Studies (RFS), Forthcoming; European Corporate Governance Institute (ECGI) - Finance Working Paper No. 440/2014; NBER Working Paper No. w20476. 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 (SKK) Graduate School of Business ( email )

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

Register to save articles to
your library

Register

Paper statistics

Downloads
1,329
rank
12,614
Abstract Views
9,998
PlumX