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Strategic News Releases in Equity Vesting Months

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  • Edmans, Alex
  • Xu, Moqi
  • Goncalves-Pinto, Luis
  • Wang, Yanbo

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.

Suggested Citation

  • Edmans, Alex & Xu, Moqi & Goncalves-Pinto, Luis & Wang, Yanbo, 2014. "Strategic News Releases in Equity Vesting Months," CEPR Discussion Papers 10144, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:10144
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    More about this item

    Keywords

    Ceo incentives; Equity vesting; News.; Voluntary disclosure;
    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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