IPO Firm Executives, Compensation, and Selling
Journal of Entrepreneurial Finance and Business Ventures, Vol. 11, No. 1, 2006
Posted: 13 Jan 2009
Date Written: January 13, 2009
Abstract
IPO firm executives are significant net sellers in the year immediately following the IPO year. Two significant variables affecting their sales are the number of stock options exercised during the year and the number of shares held at the end of the preceding year. Contrary to the findings of the previous studies, the number of stock options and the number of restricted stocks turn out to be insignificant. The evidence suggests that IPO executives sell mainly to realize a significant part of their undiversified wealth; however, they do not sell to explicitly hedge against stock option grants or to exploit potential overvaluation.
Keywords: Stock Option, Restricted Stock, Initial Public Offering
JEL Classification: G30, G32, G39
Suggested Citation: Suggested Citation