IPO Firm Executives, Compensation, and Selling

Jaemin Kim and Kuntara Pukthuanthong
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Jaemin Kim: San Diego State University
Kuntara Pukthuanthong: San Diego State University

Journal of Entrepreneurial Finance, 2006, vol. 11, issue 1, 3-21

Abstract: IPO firm executives are significant net sellers in the year immediately following the IPO year. Two significant variables affecting their sales are the number of stock options exercised during the year and the number of shares held at the end of the preceding year. Contrary to the findings of the previous studies, the number of stock options and the number of restricted stocks turn out to be insignificant. The evidence suggests that IPO executives sell mainly to realize a significant part of their undiversified wealth; however, they do not sell to explicitly hedge against stock option grants or to exploit potential overvaluation.

Keywords: Compensation; Executives; Firm; Firms; IPO (search for similar items in EconPapers)
JEL-codes: G24 M12 M13 M52 (search for similar items in EconPapers)
Date: 2006
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