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Journal of Economics and Finance

Erschienen in:

11.01.2023

Does a CEO’s ability to hedge affect the firm’s payout policy?

verfasst von: Lee M. Dunham, Sijing Wei, Jiarui (Iris) Zhang

Erschienen in: Journal of Economics and Finance | Ausgabe 2/2023

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Abstract

We examine whether a CEO’s composition of firm stockholdings between restricted and unrestricted shares impacts the firm’s payout policy. We document a positive and statistically significant relationship between measures of payout policy and the proportion of CEO total shareholdings that are unrestricted, and this positive relationship holds for alternative measures of payout. This result supports the notion that the composition of a CEO’s portfolio of firm stock between restricted and unrestricted shares is a significant determinant of the firm’s payout policy.

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Most traditional hedging instruments used by executives, such as prepaid variable forward contracts and equity swaps, typically only allow for unrestricted shares to be used in these transactions.

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Titel: Does a CEO’s ability to hedge affect the firm’s payout policy?
verfasst von: Lee M. Dunham
Sijing Wei
Jiarui (Iris) Zhang
Publikationsdatum: 11.01.2023
Verlag: Springer US
Erschienen in: Journal of Economics and Finance / Ausgabe 2/2023
Print ISSN: 1055-0925
Elektronische ISSN: 1938-9744
DOI: https://doi.org/10.1007/s12197-022-09614-7

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