Please use this identifier to cite or link to this item:
http://hdl.handle.net/10397/107022
Title: | Say on pay laws and insider trading | Authors: | Bourveau, T Brochet, F Ferri, F Sun, C |
Issue Date: | 2023 | Source: | Accounting review, 2023, Research article: November 30 2023, Early Access, https://doi.org/10.2308/TAR-2021-0596 | Abstract: | We examine whether mandatory adoption of say on pay increases executives’ incentives to engage in insider trading to compensate for the negative impact of say on pay on the value of their explicit compensation packages. Our empirical design exploits the staggered adoption of say on pay laws across 14 countries over the 2000–2015 period. We find that mandatory adoption is associated with a material increase in insider trading profits, especially in firms where executive pay is most affected. The increase in insider trading profits is driven mostly by more frequent and larger profitable insider sales, consistent with executives’ desire to reduce their greater exposure to firm-specific risk while increasing their trading profits. Overall, our results highlight the importance of considering potential effects on insider trading incentives when designing compensation reforms and when assessing their effectiveness. | Keywords: | Corporate governance Executive compensation Insider trading Regulation Shareholder activism Shareholder voting Say on pay |
Publisher: | American Accounting Association | Journal: | Accounting review | ISSN: | 0001-4826 | EISSN: | 1558-7967 | DOI: | 10.2308/TAR-2021-0596 | Rights: | This is the accepted manuscript of the following article: Thomas Bourveau, Francois Brochet, Fabrizio Ferri, Chengzhu Sun; Say on Pay Laws and Insider Trading. The Accounting Review 2023, which has been published in final form at https://doi.org/10.2308/TAR-2021-0596. |
Appears in Collections: | Journal/Magazine Article |
Show full item record
Items in DSpace are protected by copyright, with all rights reserved, unless otherwise indicated.