Manipulative Games of Gifts by Corporate Executives

University of Pennsylvania Journal of Business Law, Forthcoming

Ross School of Business Paper No. 1304

46 Pages Posted: 2 Mar 2016

See all articles by Sureyya Avci

Sureyya Avci

University of Michigan, Stephen M. Ross School of Business

Cindy A. Schipani

University of Michigan, Stephen M. Ross School of Business

H. Nejat Seyhun

University of Michigan, Stephen M. Ross School of Business

Date Written: February 2016

Abstract

Executives use a variety of manipulative games to maximize the value of their gifts, including backdating, spring-loading, bullet-dodging and insider information. We find that executives exploit a legal loophole to backdate their gifts. Stock prices rise abnormally about 6% during the one-year period before the gift date and they fall abnormally by about 5% during the one year after the gift date. We find this pattern is stronger for late-reported gifts, which is consistent with the backdating hypothesis. We suggest policy recommendations that should improve the compliance of gifts with the requirements of anti-fraud provisions of federal securities laws.

Keywords: securities law, tax law, charitable donations, disclosure requirements, corporate law, empirical evidence, public policy

JEL Classification: K22, K34, K42, M14, E62, E61, G18, H21, H25, H26

Suggested Citation

Avci, Sureyya and Schipani, Cindy A. and Seyhun, H. Nejat, Manipulative Games of Gifts by Corporate Executives (February 2016). University of Pennsylvania Journal of Business Law, Forthcoming; Ross School of Business Paper No. 1304. Available at SSRN: https://ssrn.com/abstract=2740526 or http://dx.doi.org/10.2139/ssrn.2740526

Sureyya Avci (Contact Author)

University of Michigan, Stephen M. Ross School of Business ( email )

701 Tappan Street
Ann Arbor, MI MI 48109
United States

Cindy A. Schipani

University of Michigan, Stephen M. Ross School of Business ( email )

701 Tappan Street
Ann Arbor, MI 48109
United States
(734) 763-2257 (Phone)
(734) 763-2257 (Fax)

H. Nejat Seyhun

University of Michigan, Stephen M. Ross School of Business ( email )

701 Tappan Street
Ann Arbor, MI MI 48109
United States
734-763-5463 (Phone)

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