Insider sales under the threat of short sellers: New hypothesis and new tests

• Main Authors: Kemin Wang, WANG, Rencheng, Wei, K. C. John, Zhang, Bohui, Zhou, Yi
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2022
• Subjects: Regulation SHO; short selling; insider trading; disciplining hypothesis; crowding-out hypothesis; Accounting; Finance and Financial Management
• Online Access: https://ink.library.smu.edu.sg/soa_research/1925; https://ink.library.smu.edu.sg/context/soa_research/article/2952/viewcontent/paper_635.pdf
• Institution: Singapore Management University

Using the Regulation SHO program as a quasi-experiment, we document that the threat of short selling has a negative effect on the volume of opportunistic insider selling and a positive effect on its profitability for each transaction. These effects are stronger among firms with higher litigation ris...