Why Do Insiders Hedge Their Ownership? An Empirical Examination

Carr Bettis, John Bizjak and Swaminathan Kalpathy

Financial Management, 2015, vol. 44, issue 3, 655-683

Abstract: type="main">

We examine different types of derivative instruments used by corporate insiders. These instruments are more likely to be used when there is greater insider ownership and greater capital market scrutiny. While these instruments may be allowed by boards to mitigate agency problems relating to overvalued equity and high equity-based pay, our evidence regarding forwards and collars is more consistent with the strategic timing of transactions by insiders. Exchange funds appear to be primarily used for diversification and are associated with higher personal tax rates. Collectively, our results suggest that there is significant heterogeneity in the motivation to use these instruments.

Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (17)

Downloads: (external link)
http://hdl.handle.net/10.1111/fima.12083 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bla:finmgt:v:44:y:2015:i:3:p:655-683

Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=0046-3892

Access Statistics for this article

Financial Management is currently edited by William G. Christie

More articles in Financial Management from Financial Management Association International Contact information at EDIRC.
Bibliographic data for series maintained by Wiley Content Delivery ().