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Private Information in Executives' Option Trades: Evidence from the UK

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Author Info
Kyriacou, Kyriacos
Luintel, Kul B () (Cardiff Business School)
Mase, Bryan

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Abstract

This paper investigates whether UK executives use private information in the trading decisions associated with the exercise of their executive stock options. We find that UK executives' exercise and sell decisions are motivated by their private information but not by their anticipation of future return volatility. These findings appear robust when we control for additional motivating factors that include option moneyness, the previous stock return and the value of the exercise. We argue that the disparity in the informativeness of US and UK executives' trades at exercise is related to important differences in executive remuneration, and in the regulation and taxation of executive stock options.

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File URL: http://www.cardiff.ac.uk/carbs/econ/workingpapers/papers/E2008_4.pdf
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Publisher Info
Paper provided by Cardiff University, Cardiff Business School, Economics Section in its series Cardiff Economics Working Papers with number E2008/4.

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Length: 45 pages
Date of creation: Feb 2008
Date of revision:
Publication status: Forthcoming in Economica
Handle: RePEc:cdf:wpaper:2008/4

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Related research
Keywords: Executive remuneration; executive stock options; trade informativeness;

Find related papers by JEL classification:
G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies
G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation

This paper has been announced in the following NEP Reports:

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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