Short selling pressure, stock price behavior, and management forecast precision : Evidence from a natural experiment
Research output: Journal Publications and Reviews › RGC 21 - Publication in refereed journal › peer-review
Author(s)
Related Research Unit(s)
Detail(s)
Original language | English |
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Pages (from-to) | 79-117 |
Journal / Publication | Journal of Accounting Research |
Volume | 53 |
Issue number | 1 |
Publication status | Published - 1 Mar 2015 |
Link(s)
Abstract
Using a natural experiment (Regulation SHO), we show that short selling pressure and consequent stock price behavior have a causal effect on managers' voluntary disclosure choices. Specifically, we find that managers respond to a positive exogenous shock to short selling pressure and price sensitivity to bad news by reducing the precision of bad news forecasts. This finding on management forecasts appears to be generalizable to other corporate disclosures. In particular, we find that, in response to increased short selling pressure, managers also reduce the readability (or increase the fuzziness) of bad news annual reports. Overall, our results suggest that maintaining the current level of stock prices is an important consideration in managers' strategic disclosure decisions.
Research Area(s)
- Annual report readability, Corporate disclosure, Forecast precision, Managerial incentives, Regulation SHO, Short selling
Citation Format(s)
Short selling pressure, stock price behavior, and management forecast precision: Evidence from a natural experiment. / Li, Yinghua; Zhang, Liandong.
In: Journal of Accounting Research, Vol. 53, No. 1, 01.03.2015, p. 79-117.
In: Journal of Accounting Research, Vol. 53, No. 1, 01.03.2015, p. 79-117.
Research output: Journal Publications and Reviews › RGC 21 - Publication in refereed journal › peer-review