Sarbanes-Oxley Act and patterns in stock returns around executive stock option exercise disclosures

Eli Bartov, Lucile Faurel

Research output: Contribution to journalArticle

4 Citations (Scopus)

Abstract

We document negative stock returns and elevated trading volumes around executives' early option exercise disclosures post-SOX, but not pre-SOX. This stock price reaction is incomplete, and the negative stock price drift is smaller post-SOX compared to pre-SOX. We also show effects of media coverage in the stock price response to exercise disclosures in the post-SOX period. These findings provide evidence that the requirement mandated by SOX to disclose executives' stock option exercises within two business days, and the increased media coverage, improves investors' ability to incorporate into stock prices in a timely fashion the information conveyed by these exercises.

Original languageEnglish (US)
JournalAccounting and Finance
DOIs
StateAccepted/In press - 2014
Externally publishedYes

Fingerprint

Disclosure
Exercise
Executive stock options
Stock returns
Sarbanes-Oxley Act
Stock prices
Media coverage
Investors
Trading volume
Price response
Stock price reaction

Keywords

  • Employee stock options
  • Form 4 filings
  • Insider trading
  • Private information
  • Sarbanes-Oxley Act

ASJC Scopus subject areas

  • Economics, Econometrics and Finance (miscellaneous)
  • Accounting
  • Finance

Cite this

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