Short sellers and long-run management forecasts
We examine how short sellers affect long-run management forecasts using a natural experiment (Regulation SHO) that relaxes short-selling constraints on a group of randomly selected firms (referred to as pilot firms). We find that compared to other firms, the pilot firms issue more long-run good news...
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Main Authors: | , , , |
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Format: | text |
Language: | English |
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Institutional Knowledge at Singapore Management University
2020
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Subjects: | |
Online Access: | https://ink.library.smu.edu.sg/soa_research/1874 https://ink.library.smu.edu.sg/cgi/viewcontent.cgi?article=2901&context=soa_research |
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Institution: | Singapore Management University |
Language: | English |
Summary: | We examine how short sellers affect long-run management forecasts using a natural experiment (Regulation SHO) that relaxes short-selling constraints on a group of randomly selected firms (referred to as pilot firms). We find that compared to other firms, the pilot firms issue more long-run good news forecasts but do not change the frequency of long-run bad news forecasts. The increase in good news forecasts is greater when the pilot firms have higher-quality forecasts, greater uncertainty about firm value, or higher manager equity incentives. Overall, these results and the results of additional analyses indicate that the reduction in short-selling constraints and the increase in short-selling threat induce managers to enhance disclosures through more long-run good news forecasts to discourage short sellers. |
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