3 ms·

Has anyone read the paper? What is the effect size? I'm assuming the author means "statistically significant", which is worthless from any decisionmaking perspe

• notahacker 9y ago
  Effect size is ~0.2% of annualised net investment in R&D ($2m for median firm size) per standard deviation in vesting equity (unvested equity and remaining vested stock have minimal effect on equation as specified). So not huge but not trivial. Paper is pretty thorough, including looking at changes in actual measures of firm efficiency, forecasts by friendly analysts vs actual earnings growth and an attempt to defeat the reasonable alternate hypothesis that boards time vesting decisions according to when they think massive investment is no longer needed and earnings growth will kick in. It does however focus on [estimated per quarter based on annual info] vesting schedules and not actual share sale decisions. Actual share sales are found not to be statistically significantly related to investment drops (likely due to a variety of other reasons for offloading and reluctance to offload if the investment drop is due to short term dips)