Edmans, Fang, and Lewellen (2017)

Edmans, Alex, Vivian Fang, Katharina Lewellen. “Equity Vesting and Investment.” The Review of Financial Studies, 2017.

From the authors’ abstract: This paper links the CEO’s concerns for the current stock price to reductions in real investment. We identify short-term concerns using the amount of stock and options scheduled to vest in a given quarter. A one standard deviation increase in vesting equity is associated with an annualized 0.2% decline in growth in R&D plus net capital expenditure (scaled by total assets), 11% of the average investment-to-assets ratio. Vesting equity is also associated with positive analyst forecast revisions and positive earnings guidance during the same quarter.“

Link: https://academic.oup.com/rfs/article/30/7/2229/3058111