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Management Compensation, Insider Trading and Lobbying Choice: The Case of R & D

Author

Listed:
  • Ehsan Habib Feroz

    (Visiting Assistant Professor of Accounting, University of Minnesota–Twin Cities.)

  • Robert L. Hagerman

    (Professor of Accounting and Finance, State University of New York at Buffalo.)

Abstract

In this study we examine the consistency between lobbying choices and insider trading behaviour by managers before and after the issuance of the 1974 FASB Exposure Draft on R&D. The results, though not very strong, indicate that managers compensated by accounting-based schemes lobbied against the FASB 1974 Exposure Draft on R&D and sold the shares of their firms, while managers compensated by market-based schemes lobbied for and bought shares of their firms. These results provide additional evidence that managers' lobbying choice can act as a surrogate for their beliefs as reflected in their insider trading behaviour.

Suggested Citation

  • Ehsan Habib Feroz & Robert L. Hagerman, 1990. "Management Compensation, Insider Trading and Lobbying Choice: The Case of R & D," Australian Journal of Management, Australian School of Business, vol. 15(2), pages 297-314, December.
    • Handle: RePEc:sae:ausman:v:15:y:1990:i:2:p:297-314
    DOI: 10.1177/031289629001500205
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    References listed on IDEAS

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