CEOs Donating Stock to Selves

From the current issue of Journal of Financial Economics:

Deductio’ ad absurdum: CEOs donating their own stock to their own family foundations
David Yermacka


I study large charitable stock gifts by Chairmen and Chief Executive Officers (CEOs) of public companies. These gifts, which are not subject to insider trading law, often occur just before sharp declines in their companies’ share prices. This timing is more pronounced when executives donate their own shares to their own family foundations. Evidence related to reporting delays and seasonal patterns suggests that some CEOs fraudulently backdate stock gifts to increase personal income tax benefits. CEOs’ family foundations hold donated stock for long periods rather than diversifying, permitting CEOs to continue voting the shares.