Determinants and trading performance of equity deferrals

Franco, F, Ittner, C D and Urcan, O (2016) Determinants and trading performance of equity deferrals. Management Science, 63 (1). pp. 114-138. ISSN 0025-1909

Abstract

This study investigates the determinants and trading performance of outside directors’ equity deferrals, which represent the choice to convert part or all of their annual cash compensation into deferred company stock. Using a large sample of S&P 1500 firms that allowed directors to defer their cash fees into equity between 1999 and 2009, we find significant associations between equity deferral choices and specific features of the director compensation plans, proxies for directors’ outside wealth diversification, and future firm stock market performance. Trading performance analyses indicate that outside directors earn substantial abnormal returns from their deferrals, with a significant proportion of the deferral transactions occurring during blackout periods. These results are consistent with companies structuring director equity deferral plans to circumvent U.S. Securities and Exchange Commission Rule 10b-5’s trading restrictions.

More Details

Item Type: Article
Subject Areas: Accounting
Additional Information: © 2016 INFORMS
Subjects: I > Insider trading
A > Accounting procedures
Date Deposited: 28 Nov 2016 15:34
Last Modified: 18 Jul 2018 16:04
URI: http://lbsresearch.london.edu/id/eprint/718
More

Export and Share


Download

Full text not available from this repository.

Statistics

Altmetrics

Downloads from LBS Research Online

View details

Actions (login required)

Edit Item Edit Item