Stock trading behaviour and firm performance: Do CEO equity-based compensation and block ownership matter?

Larelle Chapple, Brandon Chen, Tahir Suleman and Thu Phuong Truong

Pacific-Basin Finance Journal, 2021, vol. 66, issue C

Abstract: Using unique and proprietary daily trade data from qualified market participants, our study empirically investigates the impact of trading aggressiveness on firm performance and the moderating impact of equity-based compensation and block ownership. Based on a dataset including 3,775,646 daily trades by 35 qualified market participants for 414 New Zealand Exchange (NZX) listed firms over the period 1996–2011, we find that aggressive trading does not consistently improve firm performance across all trading measures and after addressing endogeneity concern. Our findings even hold among firms with CEO equity-based compensation and high level of block ownership. Our study challenges the crucial role of CEO equity-based pay and block ownership in the theory of “governance through trading”.

Keywords: Governance through trading; Firm performance; CEO equity-based compensation; Block ownership (search for similar items in EconPapers)
JEL-codes: G10 G20 G30 N20 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0927538X17303645
Full text for ScienceDirect subscribers only

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:eee:pacfin:v:66:y:2021:i:c:s0927538x17303645

DOI: 10.1016/j.pacfin.2019.03.006

Access Statistics for this article

Pacific-Basin Finance Journal is currently edited by K. Chan and S. Ghon Rhee

More articles in Pacific-Basin Finance Journal from Elsevier
Bibliographic data for series maintained by Catherine Liu ().