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Le, V, Nguyen, A-N, Gregoriou, A and Forbes, W (2024) Insider Trading and CEO Pay-Gap Induced Turnover. Journal of Risk and Financial Management, 17 (11). ISSN 1911-8066
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Insider Trading and CEO Pay-Gap Induced Turnover.pdf - Published Version Available under License Creative Commons Attribution. Download (1MB) | Preview |
Abstract
We explore how insider trading returns, disparities in executive pay, and CEO turnover are interrelated. Our findings reveal both independent and interactive effects for insider trading returns, the CEO pay gap, and the likelihood of CEO turnover. First, an increase in abnormal returns from insider purchases lowers the probability of a CEO’s turnover, while an increase in abnormal returns from insider sales increases the likelihood of a CEO’s dismissal. Second, the CEO pay gap negatively affects the probability of CEO turnover for insider purchases, but it does not have a similar effect on insider sales. Third, the interaction between insider abnormal returns and any CEO pay disparity influences the impact of these returns on CEO turnover. Specifically, this interaction diminishes the positive effect of insider selling on the probability of a CEO’s dismissal, offsets the negative effect of insider purchasing on CEO dismissal, and, finally, amplifies the negative impact of CEO pay disparity on the probability of a CEO’s dismissal during periods witnessing insider purchases.
| Item Type: | Article |
|---|---|
| Subjects: | H Social Sciences > HF Commerce > HF5001 Business |
| Divisions: | Liverpool Business School |
| Publisher: | MDP |
| SWORD Depositor: | A Symplectic |
| Date Deposited: | 01 Nov 2024 09:04 |
| Last Modified: | 01 Nov 2024 09:15 |
| DOI or ID number: | 10.3390/jrfm17110483 |
| URI: | https://researchonline.ljmu.ac.uk/id/eprint/24644 |
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