@article{45c0a7ff01f8455ab2d9233a19932627,
title = "The gift that keeps on giving: stock returns around CEO stock gifts to family members",
abstract = "We examine an overlooked type of insider transaction—CEOs{\textquoteright} stock gifts to family members. CEOs should prefer to make family stock gifts at relative price minima, consistent with an estate and gift tax planning strategy called an estate freeze. We demonstrate that CEO freeze gifts generally follow temporary price suppressions and precede significant price appreciation, leading to substantial estate tax savings. Further, we find positive market returns one and two years following disclosure of freeze gifts. However, the market response to disclosure of these gifts is confounded by the delayed reporting regime for gifts. We demonstrate additional strategic behavior based on evidence of backdating, timing around earnings announcements, and subsequent sales of gifted shares preceding diminishing stock performance. Our findings suggest CEO family stock gifts credibly signal future price performance, which market participants would benefit from knowing if the information were promptly disclosed.",
keywords = "Estate & gift taxes, Family wealth, Insider trading, Securities regulations",
author = "Brown, {Jennifer L.} and George Huston and Wenzel, {Brian S.}",
note = "Funding Information: We would like to thank the editor, Jennifer Blouin, and an anonymous reviewer for their valuable insights and suggestions. We would also like to thank conference participants at the EIASM Conference on Current Research in Taxation, the University of North Carolina Tax Symposium, the Journal of the American Taxation Association 2018 Midyear Meeting, workshop participants at Arizona State University, Baylor University, Indiana University, Michigan State University, Oregon State University, and Texas Tech University, as well as the Tax Readings Group at the University of Texas for their helpful comments. In addition, we greatly appreciate conference discussions from Shane Heitzman and Stevie Neumann, as well as feedback from Shannon Chen, Alex Edwards, Leslie Hodder, Artur Hugon, Janet Huston, Paul Mason, Lil Mills, Michael Mowchan, Ed Outslay, Sonja Rego, Joanna Shaw, and Jaron Wilde. Brian Wenzel would personally like to thank the Accounting Doctoral Scholars Program for financial support. Publisher Copyright: {\textcopyright} 2022, The Author(s), under exclusive licence to Springer Science+Business Media, LLC, part of Springer Nature.",
year = "2022",
doi = "10.1007/s11142-022-09732-x",
language = "English (US)",
journal = "Review of Accounting Studies",
issn = "1380-6653",
publisher = "Springer New York",
}