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Strategic news releases in equity vesting months

Edmans, Alex, Goncalves-Pinto, Luis, Groen-Xu, Moqi and Wang, Yanbo (2018) Strategic news releases in equity vesting months. Review of Financial Studies, 31 (11). pp. 4099-4141. ISSN 0893-9454

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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.

Item Type: Article
Official URL: https://academic.oup.com/rfs
Additional Information: © 2018 Society for Financial Studies
Divisions: Finance
Subjects: H Social Sciences > HG Finance
JEL classification: G - Financial Economics > G1 - General Financial Markets > G14 - Information and Market Efficiency; Event Studies
G - Financial Economics > G3 - Corporate Finance and Governance > G34 - Mergers; Acquisitions; Restructuring; Corporate Governance
Sets: Departments > Finance
Date Deposited: 12 Jun 2018 10:12
Last Modified: 20 Jul 2019 00:14
Projects: 638666, R-315-000-094-133
Funders: European Research Council, Singapore MOE AcRF, STICERD, Graduate School Business Sungkyunkwan University
URI: http://eprints.lse.ac.uk/id/eprint/88301

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