Strategic Repurchases and Equity Sales: Evidence from Equity Vesting Schedules

61 Pages Posted: 8 Aug 2017 Last revised: 8 Nov 2022

See all articles by David Moore

David Moore

Loyola Marymount University

Date Written: October 8, 2022

Abstract

This paper studies the strategic use and timing of share repurchases by insiders for personal gain. Using grant-level compensation data and a hand-collected sample of monthly repurchases, I find a positive causal relation between executive equity sales and share repurchases. I identify the relation using the vesting schedule of equity grants as an instrument for equity sales. This behavior is persistent across firm, executive, and governance characteristics. Both CFO and CEO vesting schedules impact repurchases, suggesting the CFO may also have influence over the execution of the repurchase program. There is minimal evidence of long-term value destruction. The results indicate executive contracts impact the execution of share repurchase programs.

Keywords: Share repurchase; share buyback; payout policy; option and stock grants; equity vesting; equity compensation CEO incentives and myopia.

JEL Classification: G14, G30, G35, M12

Suggested Citation

Moore, David, Strategic Repurchases and Equity Sales: Evidence from Equity Vesting Schedules (October 8, 2022). Journal of Banking and Finance, forthcoming, Available at SSRN: https://ssrn.com/abstract=3014462 or http://dx.doi.org/10.2139/ssrn.3014462

David Moore (Contact Author)

Loyola Marymount University ( email )

Los Angeles, CA 90045
United States

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