Publication: The effect of CEO luck on the informativeness of stock prices: Do lucky CEOs improve stock price informativeness?
Issued Date
2014-01-01
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ISSN
15446123
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2-s2.0-84907280551
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Mahidol University
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SCOPUS
Bibliographic Citation
Finance Research Letters. Vol.11, No.3 (2014), 289-294
Suggested Citation
Pandej Chintrakarn, Pornsit Jiraporn, Napatsorn Jiraporn The effect of CEO luck on the informativeness of stock prices: Do lucky CEOs improve stock price informativeness?. Finance Research Letters. Vol.11, No.3 (2014), 289-294. doi:10.1016/j.frl.2013.11.006 Retrieved from: https://repository.li.mahidol.ac.th/handle/123456789/33803
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Title
The effect of CEO luck on the informativeness of stock prices: Do lucky CEOs improve stock price informativeness?
Abstract
© 2013 Elsevier Inc. CEOs are “lucky“ when they are granted stock options on days when the stock price is lowest in the month of the grant, implying opportunistic timing and severe agency problems (Bebchuk et al., 2010). Using idiosyncratic volatility as our measure of stock price informativeness, we find that lucky CEOs improve the informativeness of stock prices significantly. In particular, CEO luck raises the degree of informativeness by 4.39%. Powerful CEOs who can circumvent governance mechanisms and successfully practice opportunistic timing of options grants are so secured in their positions that they have fewer incentives to conceal information, thereby improving informativeness.