Strategic news releases in equity vesting months
Subject
Finance
Publishing details
CEPR discussion paper
Authors / Editors
Edmans A; Goncalves-Pinto L; Wang Y; Xu M
Biographies
Publication Year
2016
Abstract
We show that CEOs strategically time corporate news releases to coincide with months in which their equity vests. These vesting months are determined by equity grants made several years prior, and thus unlikely driven by the current information environment. CEOs reallocate news into vesting months, and away from prior and subsequent months. They release 5% more discretionary news in vesting months than prior months, but there is no difference for non-discretionary news. These news releases lead to favourable media coverage, suggesting they are positive in tone. They also generate a temporary run-up in stock prices and market liquidity, potentially resulting from increased investor attention or reduced information asymmetry. The CEO takes advantage of these effects by cashing out shortly after the news releases.
Keywords
CEO Incentives; Equity Vesting, News; Voluntary Disclosure
Series Number
DP10144
Series
CEPR discussion paper