Equity Incentives, Disclosure Quality, and Stock Liquidity Risk

Karen H. Wruck and YiLin Wu
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Karen H. Wruck: Ohio State University
YiLin Wu: National Taiwan University

Working Paper Series from Ohio State University, Charles A. Dice Center for Research in Financial Economics

Abstract: We provide evidence that CEO equity incentives, especially stock options, influence stock liquidity risk via information disclosure quality. We document a negative association between CEO options and the quality of future managerial disclosure policy. Contributing to the literature on CEO risk-taking, we document a positive association between CEO options and future systematic stock liquidity risk. Controlling for endogeneity, we show that information disclosure quality is an important channel through which CEO options influence stock liquidity risk. Results are robust to various controls for endogeneity and to the use of numerous disclosure quality and stock liquidity risk measures.

JEL-codes: D22 G12 G32 G34 J33 J41 O31 (search for similar items in EconPapers)
Date: 2017-02
New Economics Papers: this item is included in nep-cfn and nep-rmg
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:ecl:ohidic:2017-02

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