Abstract
We investigate how executive pay disparity affects insider profits around earnings news. Our findings reveal that high pay disparity is linked to higher abnormal returns from insider purchases before positive news, suggesting insiders exploit good news for greater gains. Conversely, it is associated with lower abnormal returns from insider sales before negative news, indicating less benefit from such sales. These insights highlight the influence of pay disparity on insider trading and underscore the importance of understanding this dynamic to improve decision-making and reduce misuse of insider information.
| Original language | English |
|---|---|
| Article number | 453 |
| Number of pages | 36 |
| Journal | Journal of Risk and Financial Management |
| Volume | 17 |
| Issue number | 10 |
| DOIs | |
| Publication status | Published - 6 Oct 2024 |
Bibliographical note
This article is an open access article distributed under the terms and conditions of the Creative Commons Attribution (CC BY) license (https://creativecommons.org/licenses/by/4.0/).Keywords
- insider gains
- CEO pay gap
- CEO pay slice
- earnings disclosure
- good news
- bad news
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