Say on Pay Laws and Insider Trading
成果类型：
Article
署名作者：
Bourveau, Thomas; Brochet, Francois; Ferri, Fabrizio; Sun, Chengzhu
署名单位：
Columbia University; Boston University; University of Miami; Hong Kong Polytechnic University
刊物名称：
ACCOUNTING REVIEW
ISSN/ISSBN：
0001-4826
DOI：
10.2308/TAR-2021-0596
发表日期：
2021
页码：
83-110
关键词：
摘要：
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.
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