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Strategic news releases in equity vesting months

Author

Listed:
  • Edmans, Alex
  • Goncalves-Pinto, Luis
  • Groen-Xu, Moqi
  • Wang, Yanbo
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.

Suggested Citation

  • Edmans, Alex & Goncalves-Pinto, Luis & Groen-Xu, Moqi & Wang, Yanbo, 2018. "Strategic news releases in equity vesting months," LSE Research Online Documents on Economics 88301, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:88301
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    More about this item

    Keywords

    Voluntary Disclosure; Equity Vesting; CEO Incentives; News;
    All these keywords.

    JEL classification:

    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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