Competition of the informed: Does the presence of short sellers affect insider selling?
We study how the presence of short sellers affects the incentives of the insiders to trade on negative information. We show it induces insiders to sell more (shares from their existing stakes) and trade faster to preempt the potential competition from short sellers. An experiment and instrumental va...
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sg-smu-ink.lkcsb_research-80492022-08-02T07:43:41Z Competition of the informed: Does the presence of short sellers affect insider selling? MASSA, Massimo QIAN, Wenlan XU, Weibiao ZHANG, Hong We study how the presence of short sellers affects the incentives of the insiders to trade on negative information. We show it induces insiders to sell more (shares from their existing stakes) and trade faster to preempt the potential competition from short sellers. An experiment and instrumental variable analysis confirm this causal relationship. The effects are stronger for "opportunistic" (i.e., more informed) insider trades and when short sellers' attention is high. Return predictability of insider sales only occurs in stocks with high short-selling potential, suggesting that short sellers indirectly enhance the speed of information dissemination by accelerating trading by insiders. (C) 2015 Elsevier B.V. All rights reserved. 2015-11-01T07:00:00Z text application/pdf https://ink.library.smu.edu.sg/lkcsb_research/7050 info:doi/10.1016/j.jfineco.2015.08.004 https://ink.library.smu.edu.sg/context/lkcsb_research/article/8049/viewcontent/1_s2.0_S0304405X15001439_main.pdf http://creativecommons.org/licenses/by-nc-nd/4.0/ Research Collection Lee Kong Chian School Of Business eng Institutional Knowledge at Singapore Management University Short selling Insider trading Informed trader Market efficiency Finance Finance and Financial Management |
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Short selling Insider trading Informed trader Market efficiency Finance Finance and Financial Management MASSA, Massimo QIAN, Wenlan XU, Weibiao ZHANG, Hong Competition of the informed: Does the presence of short sellers affect insider selling? |
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We study how the presence of short sellers affects the incentives of the insiders to trade on negative information. We show it induces insiders to sell more (shares from their existing stakes) and trade faster to preempt the potential competition from short sellers. An experiment and instrumental variable analysis confirm this causal relationship. The effects are stronger for "opportunistic" (i.e., more informed) insider trades and when short sellers' attention is high. Return predictability of insider sales only occurs in stocks with high short-selling potential, suggesting that short sellers indirectly enhance the speed of information dissemination by accelerating trading by insiders. (C) 2015 Elsevier B.V. All rights reserved. |
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MASSA, Massimo QIAN, Wenlan XU, Weibiao ZHANG, Hong |
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MASSA, Massimo QIAN, Wenlan XU, Weibiao ZHANG, Hong |
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MASSA, Massimo |
title |
Competition of the informed: Does the presence of short sellers affect insider selling? |
title_short |
Competition of the informed: Does the presence of short sellers affect insider selling? |
title_full |
Competition of the informed: Does the presence of short sellers affect insider selling? |
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Competition of the informed: Does the presence of short sellers affect insider selling? |
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Competition of the informed: Does the presence of short sellers affect insider selling? |
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competition of the informed: does the presence of short sellers affect insider selling? |
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Institutional Knowledge at Singapore Management University |
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2015 |
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https://ink.library.smu.edu.sg/lkcsb_research/7050 https://ink.library.smu.edu.sg/context/lkcsb_research/article/8049/viewcontent/1_s2.0_S0304405X15001439_main.pdf |
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