Sarbanes–Oxley Act and Patterns in Stock Returns Around Executive Stock Option Exercise Disclosures

36 Pages Posted: 3 Jun 2016

See all articles by Eli Bartov

Eli Bartov

NYU Stern School of Business

Lucile Faurel

Arizona State University

Multiple version iconThere are 2 versions of this paper

Date Written: June 2016

Abstract

We document negative stock returns and elevated trading volumes around executives’ early option exercise disclosures post‐SOX, but not pre‐SOX. This stock price reaction is incomplete, and the negative stock price drift is smaller post‐SOX compared to pre‐SOX. We also show effects of media coverage in the stock price response to exercise disclosures in the post‐SOX period. These findings provide evidence that the requirement mandated by SOX to disclose executives’ stock option exercises within two business days, and the increased media coverage, improves investors’ ability to incorporate into stock prices in a timely fashion the information conveyed by these exercises.

Keywords: Employee stock options, Form 4 filings, Private information, Sarbanes–Oxley Act, Insider trading

Suggested Citation

Bartov, Eli and Faurel, Lucile, Sarbanes–Oxley Act and Patterns in Stock Returns Around Executive Stock Option Exercise Disclosures (June 2016). Accounting & Finance, Vol. 56, Issue 2, pp. 297-332, 2016. Available at SSRN: https://ssrn.com/abstract=2788253 or http://dx.doi.org/10.1111/acfi.12100

Eli Bartov (Contact Author)

NYU Stern School of Business ( email )

44 W. 4th Street, Suite 10-96
New York, NY 10012
United States
212.998.0016 (Phone)

Lucile Faurel

Arizona State University ( email )

W.P. Carey School of Business
School of Accountancy, B267H
Tempe, AZ 85287
United States
(480) 965-6216 (Phone)

Register to save articles to
your library

Register

Paper statistics

Downloads
0
Abstract Views
667
PlumX Metrics