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
Citation
Kemin Wang; WANG, Rencheng; Wei, K. C. John; Zhang, Bohui; and Zhou, Yi.
Insider sales under the threat of short sellers: New hypothesis and new tests. (2022). Accounting Review. 97, (1), 427-451.
Available at: https://ink.library.smu.edu.sg/soa_research/1925
Copyright Owner and License
Authors
Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial-No Derivative Works 4.0 International License.
Additional URL
https://doi.org/10.2308/TAR-2018-0196