Are Pre-planned Insider Sales Strategically Timed?
[Download PDF] Previous research and numerous media articles suggest that sales executed under 10b5-1 trading plans are strategically timed. However, we find no significant difference in stock price performance following plan sales and non-plan sales. We demonstrate that price-contingent orders (e.g. limit orders), a common feature in trading plans, give rise to empirical patterns that have been taken as evidence of strategic timing of sales. Event study methods employed in previous research on plan sales are shown to give biased estimates of post-event abnormal returns when the events are not exogenous to past returns. Stocking Up: Executive Optimism and Share Retention (with Robert Tumarkin) [Download PDF] We rigorously model the option exercise and portfolio choice problem of optimistic executives. Our analysis motivates two novel indicators of optimism, which can be easily inferred using standard data sets: (i) the retention of a significant proportion of stocks obtained from optio
