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Deductio' ad absurdum: CEOs donating their own stock to their own family foundations

  • Yermack, David
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    I study large charitable stock gifts by Chairmen and Chief Executive Officers (CEOs) of public companies. These gifts, which are not subject to insider trading law, often occur just before sharp declines in their companies' share prices. This timing is more pronounced when executives donate their own shares to their own family foundations. Evidence related to reporting delays and seasonal patterns suggests that some CEOs fraudulently backdate stock gifts to increase personal income tax benefits. CEOs' family foundations hold donated stock for long periods rather than diversifying, permitting CEOs to continue voting the shares.

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    File URL: http://www.sciencedirect.com/science/article/B6VBX-4WKTX20-1/2/6423387a8e40d83a5770bd7ba5ebe54a
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    Article provided by Elsevier in its journal Journal of Financial Economics.

    Volume (Year): 94 (2009)
    Issue (Month): 1 (October)
    Pages: 107-123

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    Handle: RePEc:eee:jfinec:v:94:y:2009:i:1:p:107-123
    Contact details of provider: Web page: http://www.elsevier.com/locate/inca/505576

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    7. Paul Gompers & Josh Lerner, 1998. "Venture Capital Distributions: Short-Run and Long-Run Reactions," Journal of Finance, American Finance Association, vol. 53(6), pages 2161-2183, December.
    8. Feldstein, Martin S & Taylor, Amy, 1976. "The Income Tax and Charitable Contributions," Econometrica, Econometric Society, vol. 44(6), pages 1201-22, November.
    9. Erik Lie, 2005. "On the Timing of CEO Stock Option Awards," Management Science, INFORMS, vol. 51(5), pages 802-812, May.
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