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.
Original language | English |
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Pages (from-to) | 427-451 |
Number of pages | 25 |
Journal | Accounting Review |
Volume | 97 |
Issue number | 2 |
DOIs | |
Publication status | Published - Mar 2022 |
Externally published | Yes |
Keywords
- regulation SHO
- short selling
- insider trading
- disciplining hypothesis
- crowding-out hypothesis