Tournament Incentives and Insider Trading

UNIVERSITY OF TECHNOLOGY SYDNEY
Finance Department
Research Seminars in Finance

Meziane and Xiaoke

Topic: Tournament Incentives and Insider Trading

Speaker: Meziane Lasfer and Xiaoke Ye from the City University of London

Abstract: We document a relationship between losing the CEO promotion opportunity and an increase in the return predictability embedded in insider transactions executed by non-promoted directors. We show that the losing tournament effect is more pronounced for sell than purchase transactions. The non-promoted directors intentionally make more opportunistic sell transactions to compensate themselves for the forgone pay rise associated with the CEO position. Their sell transactions systematically predict the future worsening in firm performance, investor sentiment and the increase in the cost of capital. We show that the existence of insider trading opportunity causes the well-documented positive relationship between tournament incentives and firm performance to be weaker.

Moderator: Scott Walker, University of Technology Sydney

Date: Wednesday, 20th October 2021
Time: 5-6 pm (Australian Eastern Daylight Time)
Venue: This is on online Zoom webinar.

Seminar protocols:

  • The webinar will run for 45 minutes, followed by a 15 minute Q&A session.
  • There will be a moderator for each seminar event, who will facilitate communication and resolve any technical issues.
  • Participants can use the chat facility or raise their had to ask questions during the presentation. The moderator will then alert the speaker at the appropriate time and either ask the questions raised or unmute the participant so they can ask the question directly to the presenter.

Co-ordinator: Harry Scheule

Enquiries: Duncan Ford

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Acknowledgement of Country

UTS acknowledges the Gadigal people of the Eora Nation, the Boorooberongal people of the Dharug Nation, the Bidiagal people and the Gamaygal people, upon whose ancestral lands our university stands. We would also like to pay respect to the Elders both past and present, acknowledging them as the traditional custodians of knowledge for these lands.