Rik Sen
| Affiliation | Ph.D candidate, Stern School of Business, New York University |
| Address | Stern School of Business
New York University 44 W 4th Street, KMC 9-197 New York, NY 10012 Phone: +1-212-998-0345 |
| rsen@stern.nyu.edu | |
| Research interests | Corporate Finance, Executive Compensation, Insider Trading, Corporate Governance, Behavioral Corporate Finance, Derivatives |
| Curriculum vitae | [Download PDF] |
Working Papers
The Returns to Spring-Loading [Download PDF]
Abnormal returns following public disclosures of unscheduled grants to CEOs are positive and highly significant in the post Sarbanes Oxley period. This implies widespread spring-loading (awarding options ahead of good news releases), as backdating cannot affect abnormal returns after the disclosure date. Between September 2002 and March 2006, a trading strategy that buys stocks after news of unscheduled option grants to CEOs become public earns 1.1% monthly abnormal returns, implying the market did not realize that grants were spring-loaded. After March 2006, when it was no longer possible to spring-load grants in a clandestine fashion, this practice stopped. This suggests spring-loading was a means of providing secret compensation rather than prudent pay practice.
Are Pre-planned Insider Sales Strategically Timed? [Download PDF]
Previous research and numerous media articles suggest that sales executed under 10b5-1 trading plans are strategically timed. However, we find no significant difference in stock price performance following plan sales and non-plan sales. We demonstrate that price-contingent orders (e.g. limit orders), a common feature in trading plans, give rise to empirical patterns that have been taken as evidence of strategic timing of sales. Event study methods employed in previous research on plan sales are shown to give biased estimates of post-event abnormal returns when the events are not exogenous to past returns.
Stocking Up: Executive Optimism and Share Retention (with Robert Tumarkin) [Download PDF]
We rigorously model the option exercise and portfolio choice problem of optimistic executives. Our analysis motivates two novel indicators of optimism, which can be easily inferred using standard data sets: (i) the retention of a significant proportion of stocks obtained from option exercise and (ii) the voluntary holding of shares. Theory suggests these are superior to alternative indicators based on exercise behavior. In a large cross-section, our measures of CEO optimism explain investment intensity and leverage better than those used previously. We confirm the following implications of the model empirically: optimistic executives delay option exercise and also capture a higher proportion of the American option value.
Teaching experience
Instructor, Foundations of Financial Markets Stern Undergraduate College, New York University (Summer 2007) Topics: Fixed income, risk and return, CAPM, equity valuation and options Number of students: 24 Teaching Rating: 6.2/7.0
Conference presentations
The Returns to Spring-loading: European Finance Association (Aug, 2008); LBS Transatlantic Doctoral Conference (May, 2007)Rik Sen http://pages.stern.nyu.edu/~rsen/
rsen@stern.nyu.edu.edu