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Sarbanes–Oxley Act and patterns in stock returns around executive stock option exercise disclosures

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  • Eli Bartov
  • Lucile Faurel
  • Steven Cahan

Abstract

type="main" xml:id="acfi12100-abs-0001"> We document negative stock returns and elevated trading volumes around executives’ early option exercise disclosures post-SOX, but not pre-SOX. This stock price reaction is incomplete, and the negative stock price drift is smaller post-SOX compared to pre-SOX. We also show effects of media coverage in the stock price response to exercise disclosures in the post-SOX period. These findings provide evidence that the requirement mandated by SOX to disclose executives’ stock option exercises within two business days, and the increased media coverage, improves investors’ ability to incorporate into stock prices in a timely fashion the information conveyed by these exercises.

Suggested Citation

  • Eli Bartov & Lucile Faurel & Steven Cahan, 2016. "Sarbanes–Oxley Act and patterns in stock returns around executive stock option exercise disclosures," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 56(2), pages 297-332, June.
    • Handle: RePEc:bla:acctfi:v:56:y:2016:i:2:p:297-332
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    File URL: http://hdl.handle.net/10.1111/acfi.2016.56.issue-2
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    Cited by:

    1. Ron Bird & Peng Huang & Yue Lu, 2018. "Board independence and the variability of firm performance: Evidence from an exogenous regulatory shock," Australian Journal of Management, Australian School of Business, vol. 43(1), pages 3-26, February.
    2. Millicent Chang & Andrew B. Jackson & Marvin Wee, 2018. "A review of research on regulation changes in the Asia‐Pacific region," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 58(3), pages 635-667, September.

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