Journal article 1240 views 358 downloads
Managerial shareholding policies and retention of vested equity incentives
Journal of Empirical Finance, Volume: 27, Pages: 116 - 129
Swansea University Author:
Xicheng Liu
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DOI (Published version): 10.1016/j.jempfin.2013.10.010
Abstract
Previous studies show that corporate executives tend to liquidate equity incentives when equity-based compensation vests. This undermines long-term incentives and destroys shareholders value. It is suggested that the unwinding incentives can be limited when the firm adopts a minimum executive shareh...
Published in: | Journal of Empirical Finance |
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Published: |
2013
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http://www.sciencedirect.com/science/article/pii/S0927539813000777 |
URI: | https://cronfa.swan.ac.uk/Record/cronfa21940 |
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2019-07-30T09:49:35.3186829 v2 21940 2015-06-03 Managerial shareholding policies and retention of vested equity incentives 41d0d1b9f5dbbb7c1f7887569db233e1 0000-0002-5859-4249 Xicheng Liu Xicheng Liu true false 2015-06-03 BAF Previous studies show that corporate executives tend to liquidate equity incentives when equity-based compensation vests. This undermines long-term incentives and destroys shareholders value. It is suggested that the unwinding incentives can be limited when the firm adopts a minimum executive shareholding policy. We provide the first evidence of the effectiveness of such policies. Using data for UK FTSE 350 companies, we find that executives whose shareholding is below the policy minimum retain more newly vested equity, and the incentives to retain shares decreases when executive shareholdings are above the policy minimum. We also find higher firm valuations when executive share ownership increases relative to the minimum holdings required. Our results have important implications for the debate on executive remuneration regulations. Journal Article Journal of Empirical Finance 27 116 129 Managerial shareholding, compensation 31 12 2013 2013-12-31 10.1016/j.jempfin.2013.10.010 http://www.sciencedirect.com/science/article/pii/S0927539813000777 "Available online 6 November 2013" COLLEGE NANME Accounting and Finance COLLEGE CODE BAF Swansea University 2019-07-30T09:49:35.3186829 2015-06-03T12:30:04.6736429 Faculty of Humanities and Social Sciences School of Management - Accounting and Finance Piotr Korczak 1 Xicheng Liu 0000-0002-5859-4249 2 0021940-18122015150103.pdf LiuManagerialshareholdingpoliciesandretentionofvestedequityincentivesPostPrint.pdf 2015-12-18T15:01:03.2970000 Output 983971 application/pdf Accepted Manuscript true 2015-12-18T00:00:00.0000000 false |
title |
Managerial shareholding policies and retention of vested equity incentives |
spellingShingle |
Managerial shareholding policies and retention of vested equity incentives Xicheng Liu |
title_short |
Managerial shareholding policies and retention of vested equity incentives |
title_full |
Managerial shareholding policies and retention of vested equity incentives |
title_fullStr |
Managerial shareholding policies and retention of vested equity incentives |
title_full_unstemmed |
Managerial shareholding policies and retention of vested equity incentives |
title_sort |
Managerial shareholding policies and retention of vested equity incentives |
author_id_str_mv |
41d0d1b9f5dbbb7c1f7887569db233e1 |
author_id_fullname_str_mv |
41d0d1b9f5dbbb7c1f7887569db233e1_***_Xicheng Liu |
author |
Xicheng Liu |
author2 |
Piotr Korczak Xicheng Liu |
format |
Journal article |
container_title |
Journal of Empirical Finance |
container_volume |
27 |
container_start_page |
116 |
publishDate |
2013 |
institution |
Swansea University |
doi_str_mv |
10.1016/j.jempfin.2013.10.010 |
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Faculty of Humanities and Social Sciences |
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Faculty of Humanities and Social Sciences |
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Faculty of Humanities and Social Sciences |
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School of Management - Accounting and Finance{{{_:::_}}}Faculty of Humanities and Social Sciences{{{_:::_}}}School of Management - Accounting and Finance |
url |
http://www.sciencedirect.com/science/article/pii/S0927539813000777 |
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description |
Previous studies show that corporate executives tend to liquidate equity incentives when equity-based compensation vests. This undermines long-term incentives and destroys shareholders value. It is suggested that the unwinding incentives can be limited when the firm adopts a minimum executive shareholding policy. We provide the first evidence of the effectiveness of such policies. Using data for UK FTSE 350 companies, we find that executives whose shareholding is below the policy minimum retain more newly vested equity, and the incentives to retain shares decreases when executive shareholdings are above the policy minimum. We also find higher firm valuations when executive share ownership increases relative to the minimum holdings required. Our results have important implications for the debate on executive remuneration regulations. |
published_date |
2013-12-31T03:26:04Z |
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1763750932426784768 |
score |
11.021648 |