Abstract
We document frequent and large selling of equity by CEOs. Such selling is designed not simply to offset the current year grant of options and stock. We find that the tax burden associated with the sale and (various measures of CEO) overconfidence both decrease CEOs' propensity to sell their vested equity. However, the effect of taxes on a CEO's decision to sell equity is far more pronounced than overconfidence. We also find that taxable institutional investors and CEOs both respond to taxes, although the CEOs appear to be less tax-sensitive. Other determinants affect the selling decisions largely as predicted in the existing literature.
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