Publication Type

Journal Article

Version

submittedVersion

Publication Date

3-2022

Abstract

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 risk, greater media coverage, and executives who have more of their firms' stock-related holdings. We further find robust evidence when we extend the analyses to short selling deregulations in the Chinese and Hong Kong stock exchanges. Overall, our findings suggest that short sellers play a disciplinary role in opportunistic insider selling.

Keywords

Regulation SHO, short selling, insider trading, disciplining hypothesis, crowding-out hypothesis

Discipline

Accounting | Finance and Financial Management

Research Areas

Corporate Governance, Auditing and Risk Management

Publication

Accounting Review

Volume

97

Issue

1

First Page

427

Last Page

451

ISSN

0001-4826

Identifier

10.2308/TAR-2018-0196

Publisher

American Accounting Association

Copyright Owner and License

Authors

Additional URL

https://doi.org/10.2308/TAR-2018-0196

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