Equity-based compensation and the timing of share repurchases: the role of the corporate calendar

Tinbergen Institute Discussion Paper 21-101/IV

83 Pages Posted: 5 May 2022 Last revised: 22 Oct 2024

See all articles by Ingolf Dittmann

Ingolf Dittmann

Erasmus University Rotterdam (EUR) - Erasmus School of Economics (ESE); Tinbergen Institute; Erasmus Research Institute of Management (ERIM); European Corporate Governance Institute (ECGI)

Amy Yazhu Li

The Chinese University of Hong Kong, Shenzhen

Stefan Obernberger

Erasmus University Rotterdam - Erasmus School of Economics; Erasmus Research Institute of Management (ERIM)

Jiaqi (Jacky) Zheng

University of Oxford - Said Business School

Multiple version iconThere are 2 versions of this paper

Date Written: April 12, 2022

Abstract

We examine whether CEOs use share repurchases to sell their equity at inflated prices. We document that share repurchases, just like equity-based compensation, are affected by the corporate calendar—the firm’s schedule of earnings announcements and insider trading restrictions. The corporate calendar can fully explain why share repurchases and equity-based compensation coincide. The alignment with the corporate calendar is stricter in firms with strong internal governance or high external monitoring. When CEOs sell equity, firms are actually less likely to repurchase. Our findings reconcile earlier studies and highlight the importance of the corporate calendar for the timing of share repurchases.

Keywords: Payout policy, share repurchases, quarterly earnings announcement, equity-based compensation, insider trading, fiscal calendar

JEL Classification: G14, G35, M12, M41, M52

Suggested Citation

Dittmann, Ingolf and Li, Amy Yazhu and Obernberger, Stefan and Zheng, Jiaqi, Equity-based compensation and the timing of share repurchases: the role of the corporate calendar (April 12, 2022). Tinbergen Institute Discussion Paper 21-101/IV, Available at SSRN: https://ssrn.com/abstract=4084794 or http://dx.doi.org/10.2139/ssrn.4084794

Ingolf Dittmann (Contact Author)

Erasmus University Rotterdam (EUR) - Erasmus School of Economics (ESE) ( email )

P.O. Box 1738
3000 DR Rotterdam, NL 3062 PA
Netherlands
+31 10 4081283 (Phone)
+31 10 4089165 (Fax)

HOME PAGE: http://people.few.eur.nl/dittmann/

Tinbergen Institute

P.O. Box 1738
3000 DR Rotterdam
Netherlands

Erasmus Research Institute of Management (ERIM)

P.O. Box 1738
3000 DR Rotterdam
Netherlands

European Corporate Governance Institute (ECGI) ( email )

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

Amy Yazhu Li

The Chinese University of Hong Kong, Shenzhen ( email )

Stefan Obernberger

Erasmus University Rotterdam - Erasmus School of Economics ( email )

P.O. Box 1738
3000 DR Rotterdam, NL 3062 PA
Netherlands

Erasmus Research Institute of Management (ERIM) ( email )

P.O. Box 1738
3000 DR Rotterdam
Netherlands

Jiaqi Zheng

University of Oxford - Said Business School ( email )

Park End Street
Oxford, OX1 1HP
Great Britain

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
273
Abstract Views
1,330
Rank
91,501
PlumX Metrics