دانلود رایگان مقاله تغییرات لحن اعلام سود و فروش درون سازمانی

Abstract

The evidence from prior literature suggests that insider trading is related to firms' reported financial results and disclosure choices. I contribute to the literature by examining the association between narrative disclosure in earnings announcements and insider trading. Specifically, I hypothesize and find a positive association between changes in the optimistic tone of earnings announcements and CEOs' subsequent equity sales. In addition, I hypothesize and find that this relation is mitigated by the Sarbanes–Oxley Act and litigation risk. CEOs' financial gain from selling equity after more optimistic earnings announcements is small relative to their total compensation.

7. Conclusion

In this paper, I investigate the association between changes in the optimistic tone of earnings announcements and CEOs' equity sales. Using a sample of approximately 20,000 firm-quarters from 1998 to 2007, I find a positive relation between changes in earnings announcement tone and CEO equity sales. The positive relation is mitigated by SOX and by litigation risk. Consistent with the literature, I also find a positive relation between changes in optimistic tone in earnings announcements and abnormal returns. I use this relation to compute CEOs' gain from selling equity after more-optimistic earnings announcements and find that it is small relative to the total CEO compensation. My study makes a contribution to several streams of literature. The literature shows that insider trading is related to the propensity of managers to make earnings forecasts (Cheng & Lo, 2006), overall disclosure quality (Rogers, 2008), and the numerical results reported in the earnings announcement (Aier, 2013; Cheng & Warfield, 2005). My findings extend the literature by documenting that a specific aspect of narrative disclosure (the optimistic tone of the earnings announcement) is associated with CEO equity sales.