Journal
REVIEW OF FINANCIAL STUDIES
Volume 28, Issue 6, Pages 1701-1736Publisher
OXFORD UNIV PRESS INC
DOI: 10.1093/rfs/hhu147
Keywords
-
Categories
Funding
- ARC discovery grant from Australian Research Council [DP 120104755]
- ARC linkage grant from Australian Research Council [ARC linkage grant (LP130101050]
- CIFR research grants from the Centre for International Finance and Regulation [E026, E028]
Ask authors/readers for more resources
We hypothesize that short selling has a disciplining role vis-a-vis firm managers that forces them to reduce earnings management. Using firm-level short-selling data for thirty-three countries collected over a sample period from 2002 to 2009, we document a significantly negative relationship between the threat of short selling and earnings management. Tests based on instrumental variable and exogenous regulatory experiments offer evidence of a causal link between short selling and earnings management. Our findings suggest that short selling functions as an external governance mechanism to discipline managers.
Authors
I am an author on this paper
Click your name to claim this paper and add it to your profile.
Reviews
Recommended
No Data Available