Abstract

This paper observes the pattern of CEO option awards and corresponding SEC Form 4 filings for S&P 1500 firms after the year 2006, when the enhanced disclosure requirements took effect. CEO’s option award should be reported in Form 4 no later than two business days from the transaction date. The V-shaped abnormal return remains in my sample. The backdating phenomenon documented before SOX has been largely eliminated, however, it still occurs in late-filing observations. Another explanation for the abnormal return is the opportunistic timing of news, which consists of bullet dogging and spring loading. This phenomenon is more pronounced in the scheduled group than in the unscheduled group as the scheduled option awards can be anticipated. The multivariate regression results also show the late-filing and scheduled option awards are associated with larger abnormal returns, and the CAR is correlated with a few CEO characteristics such as age and tenure Additional tests suggest that the announcement effect of quarterly earnings varies in the before and after periods of option granting, which may be associated with deliberate CEO control over the release of news.