Shorting Activity, Private Information Flow, and Return Predictability : International Evidence from IFRS Adoption

Research output: Conference Papers (RGC: 31A, 31B, 32, 33)31A_Invited conference paper (refereed items)peer-review

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Detail(s)

Original languageEnglish
Publication statusPublished - 17 Nov 2017

Conference

Title2017 Annual Symposium for China Journal of Accounting Research
LocationXiamen University
PlaceChina
CityXiamen
Period17 - 18 November 2017

Abstract

Employing the 2005 mandatory adoption of International Financial Reporting Standards (IFRS) as an exogneous information shock and the equity-lending market as a laboratory to capture private information revelation, we show that the ability of shorting to predict negative stock returns drops after the shock of mandatory IFRS, thus reducing short-sellers’ profitability. We also show that shorting profitability decreases due to a decrease in investors’ divergence of opinion coincident with IFRS. These results imply that the shock of IFRS had the effect of crowding out short-sellers’ use of private information, consistent with a substitutional relation between public and private information.

Research Area(s)

  • equity lending market, short selling, mandatory IFRS, equity return predictability, private and public information

Bibliographic Note

Research Unit(s) information for this publication is provided by the author(s) concerned.

Citation Format(s)

Shorting Activity, Private Information Flow, and Return Predictability : International Evidence from IFRS Adoption. / Griffin, Paul A.; Hong, Hyun A.; Kalcheva, Ivalina; Kim, Jeong-Bon.

2017. 2017 Annual Symposium for China Journal of Accounting Research, Xiamen, China.

Research output: Conference Papers (RGC: 31A, 31B, 32, 33)31A_Invited conference paper (refereed items)peer-review