Alternative Title

Short sellers and corporate disclosure

Publication Type

Journal Article

Version

submittedVersion

Publication Date

6-2020

Abstract

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.

Keywords

Short Sellers, Corporate Disclosures, Management Forecasts

Discipline

Accounting | Corporate Finance

Research Areas

Corporate Reporting and Disclosure

Publication

Contemporary Accounting Research

Volume

37

Issue

2

First Page

802

Last Page

828

ISSN

0823-9150

Identifier

10.1111/1911-3846.12554

Publisher

Canadian Academic Accounting Association

Copyright Owner and License

Authors

Additional URL

https://doi.org/10.1111/1911-3846.12554

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