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Does a CEO’s ability to hedge affect the firm’s payout policy?

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  • Lee M. Dunham

    (Creighton University)

  • Sijing Wei
  • Jiarui (Iris) Zhang

    (State University of New York-Brockport)

Abstract

We examine whether a CEO’s composition of firm stockholdings between restricted and unrestricted shares impacts the firm’s payout policy. We document a positive and statistically significant relationship between measures of payout policy and the proportion of CEO total shareholdings that are unrestricted, and this positive relationship holds for alternative measures of payout. This result supports the notion that the composition of a CEO’s portfolio of firm stock between restricted and unrestricted shares is a significant determinant of the firm’s payout policy.

Suggested Citation

  • Lee M. Dunham & Sijing Wei & Jiarui (Iris) Zhang, 2023. "Does a CEO’s ability to hedge affect the firm’s payout policy?," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 47(2), pages 303-322, June.
    • Handle: RePEc:spr:jecfin:v:47:y:2023:i:2:d:10.1007_s12197-022-09614-7
    DOI: 10.1007/s12197-022-09614-7
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    References listed on IDEAS

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    More about this item

    Keywords

    Executive compensation; Managerial hedging; Firm risk; Restricted stock; Unrestricted stock; Payout policy; Dividends;
    All these keywords.

    JEL classification:

    • G35 - Financial Economics - - Corporate Finance and Governance - - - Payout Policy

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