The Informational Role of Internet-Based Short Sellers

2014 ◽  
Author(s):  
Lei Chen
Keyword(s):  
Short Sellers

scholarly journals Short sellers: Villains or scapegoats?

2011 ◽  
Vol 8 (2) ◽  
pp. 391-401
Author(s):  
Robert Wearing ◽  
Carmen A. Li
Keyword(s):  
Financial Markets ◽  
Stakeholder Theory ◽  
News Media ◽  
Share Price ◽  
Empirical Literature ◽  
Information Function ◽  
Share Prices ◽  
Short Sellers ◽  
High Share

This paper discusses the role of short sellers and the concerns which are expressed in the news media about their activities. In particular, it examines the problem of optimism in analysts’ forecasts which might initially lead to ‘high’ share prices and the limitations of both agency and stakeholder theory in providing short sellers with a legitimate role. With the help of the existing empirical literature, we argue that short sellers can be regarded as carrying out a useful information function in financial markets. Indeed, encouraging short sellers to operate more effectively in the market as well as requiring fuller disclosure of their activities could provide a useful antidote to some of the share price rises which have been seen in recent years in failing companies

The Information Intermediary Role of Short Sellers

2005 ◽  
Vol 80 (3) ◽  
pp. 941-966 ◽  
Author(s):  
Grace Pownall ◽  
Paul J. Simko
Keyword(s):  
Relative Size ◽  
Analyst Following ◽  
Earnings Expectations ◽  
Short Sellers ◽  
Future Performance ◽  
Information Intermediaries ◽  
Intermediary Role ◽  
Short Interest ◽  
Alternative Sources

This paper examines the conditions under which the market responds to disclosures of significant increases in short selling, and whether proxies for earnings expectations and alternative information sources help explain this response. Our sample is based on firms that experience abnormal short interest increases (“short spikes”) during 1989–1998. We find that the mean abnormal return around short spike announcements is significantly more negative for firms with low analyst following, consistent with short sellers providing perceived value when there are limited alternative sources of guidance available. For firms with high analyst following we find the market response is dependent on earnings levels, consistent with investors viewing a short interest increase as providing information about the sustainability of earnings. Additional analyses reveal that these inferences are not affected by measures of firms' earnings quality or by the relative size of the short spike. We infer from our analyses that the information content of short interest disclosures is conditional on both the firms' existing information environment and expectations of future performance as conveyed by prior earnings. This inference is consistent with short sellers' role as information intermediaries covering the lower tail of earnings expectations.

Doing battle with short sellers: The conflicted role of blockholders in bear raids

2012 ◽  
Vol 106 (2) ◽  
pp. 229-246 ◽  
Author(s):  
Naveen Khanna ◽  
Richmond D. Mathews
Keyword(s):  
Short Sellers

Keeping short sellers at bay through CPA: The deterring role of a firm’s lobbying activity.

2021 ◽  
Vol 2021 (1) ◽  
pp. 13341
Author(s):  
Mirzokhidjon Abdurakhmonov ◽  
Orhun Guldiken ◽  
Le Xu ◽  
Dasol Sim
Keyword(s):  
Short Sellers ◽  
Lobbying Activity

Disciplining Role of Short Sellers: Evidence From M&A Activity

2020 ◽  
pp. 014920632091230
Author(s):  
Wei Shi ◽  
Hermann Achidi Ndofor ◽  
Robert E. Hoskisson
Keyword(s):  
Stock Prices ◽  
Negative Influence ◽  
Negative Information ◽  
Short Selling ◽  
Decision Quality ◽  
Governance Mechanism ◽  
Short Sellers ◽  
Top Managers ◽  
External Governance

Prior research has focused on the influence of long investors (e.g., institutional investors) on merger-and-acquisition (M&A) decisions. This study investigates the role of short sellers in shaping managerial acquisitiveness and M&A decision quality. Short sellers impose a downward pressure on stock prices by disseminating negative information to the market. Given that managerial wealth and job security hinge on stock prices, top managers respond to increased short selling by refraining from excessive M&A activities because M&As could provide opportunities for short sellers to spread negative information and dampen stock prices. Furthermore, the negative influence of short sellers on managerial acquisitiveness is enhanced by the market for corporate control as an external governance mechanism and by CEO equity ownership as an internal governance mechanism. When firms with increasing short selling do engage in M&As, they gain higher M&A announcement returns and operating performance. We test our hypotheses using firms in the S&P 1500 from 2002 to 2014 and find support for our arguments.

The effect of short selling on volatility and jumps

2021 ◽  
pp. 031289622199641
Author(s):  
Glenn Kit Foong Ho ◽  
Sirimon Treepongkaruna ◽  
Marvin Wee ◽  
Chaiyuth Padungsaksawasdi
Keyword(s):  
Stock Market ◽  
Short Selling ◽  
Jel Classification ◽  
Market Conditions ◽  
Stock Volatility ◽  
Short Sellers ◽  
Positive Effects ◽  
Stock Market Efficiency ◽  
Trading Activities

The evidence is mixed regarding the role of short sellers on stock market efficiency, with the majority of studies assessing short selling activities during abnormal market conditions. This study investigates the effect of short selling on stock volatility during normal market conditions in the Australian stock market using various proxies for volatility and trading activities. While short volume does not supplant the number of trades in the volume and volatility relationship, our results suggest that short selling has some incremental positive effects on volatility. Overall, our vector autoregression (VAR) analysis suggests that trading by short sellers increases volatility even during normal market conditions. JEL Classification: G10, G12, G13

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