Effect of personal taxes on managers' decisions to sell their stock

• 成果类型: Article
• 署名作者: Jin, Li; Kothari, S. P.
• 署名单位: Massachusetts Institute of Technology (MIT); Harvard University
• 刊物名称: JOURNAL OF ACCOUNTING & ECONOMICS
• ISSN/ISSBN: 0165-4101
• DOI: 10.1016/j.jacceco.2008.05.002
• 发表日期: 2008
• 关键词: capital-gains taxes; performance-evaluation; ceo compensation; MARKET; equilibrium; earnings; options; price; pay; INFORMATION

摘要

We examine the effect of personal taxes on CEOs' decisions to sell their equity, controlling for diversification, managerial Overconfidence, and other determinants. While CEOs frequently sell large amounts of their unrestricted firm equity, the tax burden associated with the sale significantly deters them from selling equity even after controlling for other determinants like diversification. We also find that both taxable institutional investors and CEOs respond to taxes in their selling of equity, although CEOs appear to be less tax-sensitive. Our findings underscore the importance of taxes ill corporate and managerial decisions and they have implications for executive compensation policies. (C) 2008 Elsevier B.V. All rights reserved.