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

58 Pages Posted: 30 Aug 2014 Last revised: 16 Oct 2018

See all articles by Alex Edmans

Alex Edmans

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

Luis Goncalves-Pinto

University of New South Wales (UNSW); Chinese University of Hong Kong (CUHK)

Moqi Groen-Xu

Queen Mary University of London

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 the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

Luis Goncalves-Pinto (Contact Author)

University of New South Wales (UNSW) ( email )

Kensington
High St
Sydney, NSW 2052
Australia

HOME PAGE: http://luis.goncalvespinto.com/

Chinese University of Hong Kong (CUHK) ( email )

Cheng Yu Tung Building
Shatin
Hong Kong
Hong Kong

Moqi Groen-Xu

Queen Mary University of London ( email )

Mile End Rd
Mile End Road
London, London E1 4NS
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)

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