Skip to main content

Please enter a keyword and click the arrow to search the site

Executive deferral plans and insider trading



Publishing details

Social Sciences Research Network

Publication Year



We study executive equity contributions to non-qualified deferred compensation plans, which consist in the election to defer part or all of the annual cash pay into the company’s stock. These transactions provide executives with an alternative channel to purchase shares in the firm while benefiting from a defence against illegal insider trading allegations. Using a large sample of executive deferrals over 2000-2014, we find evidence that executives use these transactions as a means to acquire the company’s stock during blackout windows. Consistent with the conjecture that deferrals benefit from lower litigation costs that inhibit insider trading before the release of corporate news, we also find that deferral amounts are significantly higher (lower) before the disclosure of good (bad) earnings news. Together, these results suggest that executives can use equity deferrals to circumvent Rule 10b5 restrictions and generate substantial returns by strategically selecting timing and content of corporate disclosures around these transactions


Deferred compensation; Rule 10b5-1 Plans; Insider trading


Social Sciences Research Network

Available on ECCH


Select up to 4 programmes to compare

Select one more to compare
subscribe_image_desktop 5949B9BFE33243D782D1C7A17E3345D0

Sign up to receive our latest news and business thinking direct to your inbox