The Impact of CEO Turnover on Insider Trading
Date Issued
2008
Date
2008
Author(s)
Yang, Cheng-Ju
Abstract
This article examines the relation between CEO turnover and insider trading. Using 1894 CEO changes from 1987 to 2006, we find that there are abnormal insider transactions around CEO turnover. Insiders sell shares before CEO turnover and buy shares after the turnover. Different insider group, departure type, and succession type of the turnover influence insider trading around CEO turnover. Forced departure and outside succession turnovers have much insider trading around the replacements. Senior executives also have more incentive to do insider trading. We also find pre-turnover insider trading can be a predictor of firm post-turnover performance.
Subjects
CEO turnover
Insider trading
Type
thesis
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