Journal article
Information, incentive alignment, and company loan financing of insider trades
Financial management, Vol.36(4), pp.67-87
12/22/2007
Abstract
Insider acquisitions of shares are supposed to align the interests of managers and shareholders. Thus, purchases are typically viewed as positive signals. However if the transactions do not put insiders wealth at risk, perhaps this conclusion is premature. We test this idea by focusing on loan financing of insider share acquisitions. We find that loan-financed insider purchases and option exercises earn lower profits than do counterparts that are not loan financed. Our results also suggest that loan-financed insider purchases are an additional method to move an executive quickly to a target level of incentives.
Details
- Title: Subtitle
- Information, incentive alignment, and company loan financing of insider trades
- Creators
- Jon A. Garfinkel - University of IowaKathleen Kahle - University of ArizonaKuldeep Shastri - University of Pittsburgh
- Resource Type
- Journal article
- Publication Details
- Financial management, Vol.36(4), pp.67-87
- Publisher
- Wiley
- ISSN
- 0046-3892
- eISSN
- 1755-053X
- Number of pages
- 21
- Language
- English
- Date published
- 12/22/2007
- Academic Unit
- Finance
- Record Identifier
- 9984380709302771
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