Short sellers and corporate disclosure

We examine how short sellers affect corporate disclosures using a natural experiment. From May2005 to July 2007, the SEC implemented a pilot program by randomly selecting one third ofRussell 3000 stocks and removing the short sale price tests for these stocks (referred to as pilotfirms), leading to...

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Main Authors: CHEN, Xia, CHENG, Qiang, LUO, T., YUE, Heng
Format: text
Language:English
Published: Institutional Knowledge at Singapore Management University 2018
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Online Access:https://ink.library.smu.edu.sg/soa_research/1784
https://ink.library.smu.edu.sg/context/soa_research/article/2811/viewcontent/Short_sellers_and_corporate_disclosures.pdf
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spelling sg-smu-ink.soa_research-28112019-05-16T09:38:10Z Short sellers and corporate disclosure CHEN, Xia CHENG, Qiang LUO, T. YUE, Heng We examine how short sellers affect corporate disclosures using a natural experiment. From May2005 to July 2007, the SEC implemented a pilot program by randomly selecting one third ofRussell 3000 stocks and removing the short sale price tests for these stocks (referred to as pilotfirms), 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 pilotfirms and the control firms during this period. We find that compared to the control firms, thepilot firms are more likely to issue good news management forecasts without changing theissuance of bad news forecasts. We also find that the decrease in short-selling constraint for thepilot firms (1) leads to an increased likelihood of bundling bad news forecasts with good newsearnings announcements, and (2) does not lead to an increase in the optimistic bias inmanagement forecasts. Overall, our evidence suggests that the reduction in short-sellingconstraint motivates managers to disclose good news in a more timely fashion. 2018-01-01T08:00:00Z text application/pdf https://ink.library.smu.edu.sg/soa_research/1784 https://ink.library.smu.edu.sg/context/soa_research/article/2811/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
CHEN, Xia
CHENG, Qiang
LUO, T.
YUE, Heng
Short sellers and corporate disclosure
description We examine how short sellers affect corporate disclosures using a natural experiment. From May2005 to July 2007, the SEC implemented a pilot program by randomly selecting one third ofRussell 3000 stocks and removing the short sale price tests for these stocks (referred to as pilotfirms), 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 pilotfirms and the control firms during this period. We find that compared to the control firms, thepilot firms are more likely to issue good news management forecasts without changing theissuance of bad news forecasts. We also find that the decrease in short-selling constraint for thepilot firms (1) leads to an increased likelihood of bundling bad news forecasts with good newsearnings announcements, and (2) does not lead to an increase in the optimistic bias inmanagement forecasts. Overall, our evidence suggests that the reduction in short-sellingconstraint motivates managers to disclose good news in a more timely fashion.
format text
author CHEN, Xia
CHENG, Qiang
LUO, T.
YUE, Heng
author_facet CHEN, Xia
CHENG, Qiang
LUO, T.
YUE, Heng
author_sort CHEN, Xia
title Short sellers and corporate disclosure
title_short Short sellers and corporate disclosure
title_full Short sellers and corporate disclosure
title_fullStr Short sellers and corporate disclosure
title_full_unstemmed Short sellers and corporate disclosure
title_sort short sellers and corporate disclosure
publisher Institutional Knowledge at Singapore Management University
publishDate 2018
url https://ink.library.smu.edu.sg/soa_research/1784
https://ink.library.smu.edu.sg/context/soa_research/article/2811/viewcontent/Short_sellers_and_corporate_disclosures.pdf
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