NDLI: Compensation-based stock trading by corporate executive and aggregate management ownership of the firm: Some additional evidence

Content Provider	Springer Nature Link
Author	Iqbal, Zahid Shetty, Shekar
Copyright Year	2004
Abstract	Managers place a low value on equity-based compensation because it exposes them to the risk of the firm. Such undervaluation and the need to achieve diversification may force a manager to sell his own stock of the firm in response to equity-based awards. In this paper we examine whether such stock selling by an executive depends on the aggregate level of management ownership of the firm. We argue that stock selling occurs at a high level of aggregate ownership where an executive has a low probability of being replaced. Our findings support this “management ownership” argument of compensation-based stock trading. One implication is that the board's effort to minimize agency conflicts becomes less effective once aggregate ownership increases to a certain threshold level. (JEL G30, G32)
Starting Page	270
Ending Page	284
Page Count	15
File Format	PDF
ISSN	10550925
Journal	Journal of Economics and Finance
Volume Number	28
Issue Number	2
e-ISSN	19389744
Language	English
Publisher	Springer US
Publisher Date	2004-01-01
Publisher Place	Boston
Access Restriction	One Nation One Subscription (ONOS)
Subject Keyword	Economics general Financial Economics Finance /Banking
Content Type	Text
Resource Type	Article
Subject	Finance Economics and Econometrics

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Compensation-based stock trading by corporate executive and aggregate management ownership of the firm: Some additional evidence