Strategic News Releases in Equity Vesting Months
By Alex Edmans, Luis Goncalves-Pinto, Moqi Groen-Xu, Yanbo Wang. The Review of financial studies, 2018
118 citations recorded by the source corpus.
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 to be driven by the current information environment. The increase arises for positive news, but not neutral or negative news, nor nondiscretionary 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.Received August 29, 2014; editorial decision March 20, 2018 by Editor Laura Starks. Authors have furnished an Internet Appendix, which is available on the Oxford University Press Web site next to the link to the final published paper online.
Subfields: Accounting, Finance
View Paper: https://www.semanticscholar.org/paper/10f1285093c71569db973bb394e417c80d74bc66
Citations in the corpus
- Managerial Short-Termism and Investment: Evidence from Accelerated Option Vesting* (2019, unknown): “Related empirical work shows that executives time releases of news around the vesting of their equity (Edmans et al., 2018a). Edmans, Fang, and Huang (2018b) document the negative long-term consequences of managerial myopia by examining share repurchases and acquisitions.”
- Executive Compensation: A Modern Primer (2016, unknown): “Edmans, Fang, and Lewellen (2016) and Edmans et al. (2016) analyze the scheduled vesting of equity resulting from grants made several years prior.”
- Does a Long-Term Orientation Create Value? Evidence from a Regression Discontinuity (2017, unknown): “In this vein, our article is related to recent work that studies how the vesting period of stock options affects the strategic release of news (Edmans et al., 2015a) and equity sales (Edmans, Fang, and Lewellen, 2015c).”