CEO opportunism?: Option grants and stock trades around stock splits

Erik Devos, William B. Elliott and Richard S. Warr

Journal of Accounting and Economics, 2015, vol. 60, issue 1, 18-35

Abstract: Decades of research confirm that, on average, stock split announcements generate positive abnormal returns. In our sample, 80% of CEO stock option grants are timed to occur on or before the split announcement date. With the average market-adjusted announcement return of 3.1%, awarding the grant before the split announcement results in an average gain per CEO-grant of $451,748. We find additional evidence consistent with timing of CEO stock trading around the split announcement. In the case of CEO stock sales, about two-thirds occur after the split announcement, resulting in an average gain of $345,613.

Keywords: Managerial incentives; Executive compensation; Stock splits (search for similar items in EconPapers)
JEL-codes: G14 J33 (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (11)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jaecon:v:60:y:2015:i:1:p:18-35

DOI: 10.1016/j.jacceco.2015.02.004

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