RT Dissertation/Thesis
T1 Managerial incentives for attracting attention and firm investor base
A1 Papiashvili, Nino
AB This thesis studies how managerial incentives relate to strategic transmission ofsoft information from managers to investors in order to attract attention of financialmarkets. Additionally, I study trading reaction of different investors (large sophisticatedvs. small individual) to CEO voluntary announcements and how their trading is affectedwhen managerial incentives are taken into account. I use large panel data and severalalternative proxies for soft information together with intraday trading data to distinguishbetween the types of investors. The findings suggest that an increase in the proportionof managerial variable compensation is correlated with the increased use of attentionattracting mechanisms like stock split announcements, CEO annual EPS forecasts andfirm media coverage. Remarkably, such an increase in attention is not for free given thatthe probability of CEO turnover increases if managers fail to obtain positive stockreturns. Further, I examine investors' trading reaction to managerial voluntarydisclosures (EPS forecasts) and find that small investors follow simple trading strategyand buy on positive CEO announcements, whereas large investors react in a contrarianway. In addition, I find that both types of investors take into account managerialincentives while trading, though in opposite ways. Small investors see managerialvariable compensation as an incentive to lure them into more buying to optimisticannouncements. Large investors, on the other hand, look at managerial pay-forperformanceincentives as a mechanism of aligning managers' and shareholders'interests.
YR 2013
FD 2013-10
LK https://hdl.handle.net/10016/18132
UL https://hdl.handle.net/10016/18132
LA eng
DS e-Archivo
RD 19 may. 2024