TY - JOUR
T1 - The effect of CEO luck on the informativeness of stock prices
T2 - Do lucky CEOs improve stock price informativeness?
AU - Chintrakarn, Pandej
AU - Jiraporn, Pornsit
AU - Jiraporn, Napatsorn
N1 - Publisher Copyright:
© 2013 Elsevier Inc.
PY - 2014/9/1
Y1 - 2014/9/1
N2 - CEOs are “lucky“ when they are granted stock options on days when the stock price is lowest in the month of the grant, implying opportunistic timing and severe agency problems (Bebchuk et al., 2010). Using idiosyncratic volatility as our measure of stock price informativeness, we find that lucky CEOs improve the informativeness of stock prices significantly. In particular, CEO luck raises the degree of informativeness by 4.39%. Powerful CEOs who can circumvent governance mechanisms and successfully practice opportunistic timing of options grants are so secured in their positions that they have fewer incentives to conceal information, thereby improving informativeness.
AB - CEOs are “lucky“ when they are granted stock options on days when the stock price is lowest in the month of the grant, implying opportunistic timing and severe agency problems (Bebchuk et al., 2010). Using idiosyncratic volatility as our measure of stock price informativeness, we find that lucky CEOs improve the informativeness of stock prices significantly. In particular, CEO luck raises the degree of informativeness by 4.39%. Powerful CEOs who can circumvent governance mechanisms and successfully practice opportunistic timing of options grants are so secured in their positions that they have fewer incentives to conceal information, thereby improving informativeness.
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U2 - 10.1016/j.frl.2013.11.006
DO - 10.1016/j.frl.2013.11.006
M3 - Article
AN - SCOPUS:84907280551
SN - 1544-6123
VL - 11
SP - 289
EP - 294
JO - Finance Research Letters
JF - Finance Research Letters
IS - 3
ER -