The Relationship Between Insider-Trading Restrictions and CEO’s Compensation.
Date Issued
2005
Date
2005
Author(s)
Chang, Chi-Cheng
DOI
zh-TW
Abstract
This thesis aims to explore whether firms with a policy of restricting insider trading compensate their top management for the “loss” arising from not being able to profit from such transactions. Specifically, it examines, in designing chief executive officer’s (CEO) compensation contract, whether firms with restritions on insider trading (1) offer more compensation in total (2) have higher proportion of variable compensation, and (3) have higher proportion of compensation determined subjectively than firms without such a policy.
The data on the CEO’s compensation are obtained via a questionnaire survey from 80 publicly traded companies. Corporate financial data are obtained from TEJ database. The main findings are as follows.
1)Firms that restrict insider trading pay a premium in total compensation relative to firms not restricting insider trading.
2)Firms that restrict insider trading use more variable compensation relative to firms not restricting insider trading.
3)Firms that restrict insider trading use more variable compensation determined subjectively relative to firms not restricting insider trading.
The implications and limitations are offered.
Subjects
內部人交易
總經理薪酬
變動薪酬
主觀薪酬
Insider trading.
CEO compensation
Variable compensation
Subjectivity
Type
other
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