Short sellers and corporate disclosures

We examine how short sellers affect corporate disclosures using a natural experiment. From May 2005 to July 2007, the SEC implemented a pilot program by randomly selecting one third of Russell 3000 stocks and removing the short sale price tests for these stocks (referred to as pilot firms), leading...

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Main Authors: CHENG, Qiang, CHEN, Xia, LUO, Ting, YUE, Heng
Format: text
Language:English
Published: Institutional Knowledge at Singapore Management University 2014
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Online Access:https://ink.library.smu.edu.sg/soa_research/1306
https://ink.library.smu.edu.sg/context/soa_research/article/2305/viewcontent/Short_sellers_and_corporate_disclosures.pdf
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spelling sg-smu-ink.soa_research-23052019-12-16T09:04:51Z Short sellers and corporate disclosures CHENG, Qiang CHEN, Xia LUO, Ting YUE, Heng We examine how short sellers affect corporate disclosures using a natural experiment. From May 2005 to July 2007, the SEC implemented a pilot program by randomly selecting one third of Russell 3000 stocks and removing the short sale price tests for these stocks (referred to as pilot firms), leading to lower short-selling constraint, without changing the requirement for other firms (referred to as control firms). We compare the change in corporate disclosures between the pilot firms and the control firms during this period. We find that compared to the control firms, the pilot firms are more likely to issue good news management forecasts without changing the issuance of bad news forecasts. We also find that the decrease in short-selling constraint for the pilot firms (1) leads to an increased likelihood of bundling bad news forecasts with good news earnings announcements, and (2) does not lead to an increase in the optimistic bias in management forecasts. Overall, our evidence suggests that the reduction in short-selling constraint motivates managers to disclose good news in a more timely fashion. 2014-05-01T07:00:00Z text application/pdf https://ink.library.smu.edu.sg/soa_research/1306 https://ink.library.smu.edu.sg/context/soa_research/article/2305/viewcontent/Short_sellers_and_corporate_disclosures.pdf http://creativecommons.org/licenses/by-nc-nd/4.0/ Research Collection School Of Accountancy eng Institutional Knowledge at Singapore Management University Short Sales Corporate Disclosure Management Forecasts Earnings Recognition Accounting Corporate Finance
institution Singapore Management University
building SMU Libraries
continent Asia
country Singapore
Singapore
content_provider SMU Libraries
collection InK@SMU
language English
topic Short Sales
Corporate Disclosure
Management Forecasts
Earnings Recognition
Accounting
Corporate Finance
spellingShingle Short Sales
Corporate Disclosure
Management Forecasts
Earnings Recognition
Accounting
Corporate Finance
CHENG, Qiang
CHEN, Xia
LUO, Ting
YUE, Heng
Short sellers and corporate disclosures
description We examine how short sellers affect corporate disclosures using a natural experiment. From May 2005 to July 2007, the SEC implemented a pilot program by randomly selecting one third of Russell 3000 stocks and removing the short sale price tests for these stocks (referred to as pilot firms), leading to lower short-selling constraint, without changing the requirement for other firms (referred to as control firms). We compare the change in corporate disclosures between the pilot firms and the control firms during this period. We find that compared to the control firms, the pilot firms are more likely to issue good news management forecasts without changing the issuance of bad news forecasts. We also find that the decrease in short-selling constraint for the pilot firms (1) leads to an increased likelihood of bundling bad news forecasts with good news earnings announcements, and (2) does not lead to an increase in the optimistic bias in management forecasts. Overall, our evidence suggests that the reduction in short-selling constraint motivates managers to disclose good news in a more timely fashion.
format text
author CHENG, Qiang
CHEN, Xia
LUO, Ting
YUE, Heng
author_facet CHENG, Qiang
CHEN, Xia
LUO, Ting
YUE, Heng
author_sort CHENG, Qiang
title Short sellers and corporate disclosures
title_short Short sellers and corporate disclosures
title_full Short sellers and corporate disclosures
title_fullStr Short sellers and corporate disclosures
title_full_unstemmed Short sellers and corporate disclosures
title_sort short sellers and corporate disclosures
publisher Institutional Knowledge at Singapore Management University
publishDate 2014
url https://ink.library.smu.edu.sg/soa_research/1306
https://ink.library.smu.edu.sg/context/soa_research/article/2305/viewcontent/Short_sellers_and_corporate_disclosures.pdf
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