When and how are rule 10b5-1 plans used for insider stock sales?

• 成果类型: Article
• 署名作者: Fich, Eliezer M.; Parrino, Robert; Tran, Anh L.
• 署名单位: Drexel University; University of Texas System; University of Texas Austin; University of London
• 刊物名称: JOURNAL OF FINANCIAL ECONOMICS
• ISSN/ISSBN: 0304-405X
• DOI: 10.1016/j.jfineco.2023.04.009
• 发表日期: 2023
• 页码: 1-26
• 关键词: Insider trading; 10b5-1 plan; corporate governance

摘要

SEC Rule10b5-1 plans are intended to limit the ability of insiders to trade opportunistically. We study insider stock sales by CEOs both under and outside of these plans. While both groups exhibit opportunism, this behavior is more limited in plan sales and non-plan sales in well-governed firms. Furthermore, opportunism in plan sales is greater for transactions representing a larger fraction of the CEO's firm-related wealth. CEOs can circumvent the intent of Rule 10b5-1 by exercising their discretion over financial reporting and real earn-ings management and appear to benefit from material nonpublic information by selectively cancelling plans or using limit orders.(c) 2023 Elsevier B.V. All rights reserved.