Publication Type
Journal Article
Version
publishedVersion
Publication Date
5-2022
Abstract
We examine the impact of short sellers on insider trading profitability using a natural experiment of a pilot program which relaxed short-selling constraints for randomly selected pilot stocks. We find that pilot firms experienced a significant decrease in insider trading profitability during the pilot program. The results are more pronounced for the pilot firms with poor information quality, and for the pilot firms without corporate restrictions on insider trading. Our evidence suggests that short sellers serve an important market disciplinary role by reducing insider trading profitability.
Keywords
Short sellers, Insider trading, Government regulation
Discipline
Accounting | Portfolio and Security Analysis
Research Areas
Corporate Reporting and Disclosure
Publication
Journal of Accounting and Public Policy
Volume
41
Issue
3
First Page
1
Last Page
19
ISSN
0278-4254
Identifier
10.1016/j.jaccpubpol.2021.106936
Publisher
Elsevier
Citation
CHEN, Xia; CHENG, Qiang; LUO, Ting; and YUE, Heng.
Short sellers and insider trading profitability: A natural experiment. (2022). Journal of Accounting and Public Policy. 41, (3), 1-19.
Available at: https://ink.library.smu.edu.sg/soa_research/1936
Copyright Owner and License
Publisher
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/10.1016/j.jaccpubpol.2021.106936