The Relationship between CEO and CFO Educational Background and Insider Trading Abnormal Returns

Autor: Guan-Yi Wu, 吳冠儀
Rok vydání: 2018
Druh dokumentu: 學位論文 ; thesis
Popis: 106
This study examines the relationship between the educational background of CEOs and CFOs and insider trading abnormal returns. Few prior literature put emphasis on the association between personal attribute and the performance of insider trading. However trading performance, to a great degree, depends on the overall ability of insiders. As a result, this study focuses on the effect of different educational background of CEOs and CFOs on the risk appetite and the decision of insider trading. To better capture the medium-term investor experience, this research adopts buy-and-hold returns to calculate the abnormal returns. As for the educational background of a CEO or a CFO, this study uses his/her MBA degree and CPA license as the major proxies. Using a sample of S&P 1500 companies during 2012-2015, this research finds a negative association between the CEO or the CFO with an MBA degree and insider trading abnormal return, and a positive association between the CEO or the CFO with a CPA license and insider trading abnormal return. These results indicate that when the executives anticipate the stock price declining in the near term or the range of price increase is shrinking, the CEO or the CFO with an MBA degree might sell the stocks before bearing losses, while the CEO or the CFO with a CPA license might not sell the stock. Nevertheless, this result does not mean that the CEO or the CFO with an MBA degree tends to use the non-public information to execute illegal informed trades. In addition, this research finds a positive association between the situations that the CEO with a CPA license matched with the CFO with an MBA degree and insider trading abnormal returns, but there’s no significant association between the situations that CEO with an MBA degree matched with the CFO with a CPA license and insider trading abnormal returns. These results indicate that the CEO with a CPA license have power over the trading decision of the CFO with an MBA degree, while the CFO with a CPA license have no power over the trading decision of the CEO with an MBA degree.
Databáze: Networked Digital Library of Theses & Dissertations
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