CEO and CFO Stock Options and Trading Activity Around Bank Loans

IF 5.5 3区管理学 Q1 BUSINESS

Corporate Governance-An International Review Pub Date : 2024-05-30 DOI:10.1111/corg.12592

Amine Khayati, James Tompkins, David Bray, Jack Clampit

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引用次数: 0

Abstract

Research Question/Issue

When firms make major bank loan agreements, stock prices, on average, react positively. This creates an incentive for executives to time both stock trading and the dating of option grants relative to the announcement of such agreements.

Research Findings/Insights

We find evidence that both CEOs and CFOs time bank loan agreement announcements after option grant dates, significantly increase the stock purchased prior to (and the stock sold after) the announcement. Our results support management strategically timing of the bank loan agreement announcement as opposed to influencing the compensation committee to time the option grant date for the benefit of management. While these findings complement prior research on the proven CEOs opportunistic behavior around corporate events, they offer a new conspicuous evidence of CFOs opportunistic behavior.

Theoretical/Academic Implications

This study contributes to the literature on opportunistic managerial behavior around corporate events by examining the stock option grants, exercises, and stock trades surrounding a major bank loan agreement and the relational interplay between the CEOs and CFOs. While concurrently testing and confirming the expected CEOs opportunistic behavior, the study augments the literature with strong evidence of CFOs opportunistic behavior coinciding with the announcement of bank loan agreements.

Practitioner/Policy Implications

Our results are of value to the board of directors when formulating executive pay and in support of the heightened regulatory requirements on the executive compensation disclosure. Overall, our evidence calls out the Security and Exchange Commission laxity in monitoring loan-related disclosures and lends support to the SEC (2006) amended disclosure rules on CFO compensation. Complete and timely disclosures are useful to investors and analysts to assess managerial expectations and mitigate aggressive timing of corporate events.

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首席执行官和首席财务官股票期权与围绕银行贷款的交易活动

研究问题当公司签订重大银行贷款协议时，股票价格平均会做出积极反应。研究结果/见解我们发现的证据表明，首席执行官和首席财务官都将银行贷款协议公告的时间定在了期权授予日之后，从而显著增加了公告前买入的股票（以及公告后卖出的股票）。我们的研究结果支持管理层战略性地选择银行贷款协议公告的时间，而不是为了管理层的利益影响薪酬委员会选择期权授予日的时间。理论/学术启示本研究通过考察围绕一项重大银行贷款协议的股票期权授予、行使和股票交易，以及首席执行官和首席财务官之间的相互关系，为有关公司事件前后管理者机会主义行为的文献做出了贡献。在检验和证实预期的首席执行官机会主义行为的同时，本研究还提供了首席财务官机会主义行为与银行贷款协议公告相吻合的有力证据，从而丰富了相关文献。总体而言，我们的证据揭示了美国证券交易委员会对贷款相关信息披露监管不严的问题，并为美国证券交易委员会（2006 年）修订的首席财务官薪酬披露规则提供了支持。完整、及时的信息披露有助于投资者和分析师评估管理者的预期，减少公司事件的激进时机。

本文章由计算机程序翻译，如有差异，请以英文原文为准。

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来源期刊

Corporate Governance-An International Review Multiple-

CiteScore

7.00

自引率

11.30%

发文量

期刊介绍： The mission of Corporate Governance: An International Review is to publish cutting-edge international business research on the phenomena of comparative corporate governance throughout the global economy. Our ultimate goal is a rigorous and relevant global theory of corporate governance. We define corporate governance broadly as the exercise of power over corporate entities so as to increase the value provided to the organization"s various stakeholders, as well as making those stakeholders accountable for acting responsibly with regard to the protection, generation, and distribution of wealth invested in the firm. Because of this broad conceptualization, a wide variety of academic disciplines can contribute to our understanding.