Doing battle with short sellers: The conflicted role of blockholders in bear raids

• 成果类型: Article
• 署名作者: Khanna, Naveen; Mathews, Richmond D.
• 署名单位: University System of Maryland; University of Maryland College Park; Michigan State University; Michigan State University's Broad College of Business
• 刊物名称: JOURNAL OF FINANCIAL ECONOMICS
• ISSN/ISSBN: 0304-405X
• DOI: 10.1016/j.jfineco.2012.06.006
• 发表日期: 2012
• 页码: 229-246
• 关键词: Speculation; Short selling; regulation; manipulation; Bear raids

摘要

If short sellers can destroy firm value by manipulating prices down, an informed blockholder has a powerful natural incentive to protect the value of his stake by trading against them. However, he also has a potentially conflicting incentive to use his information to generate trading profits. We show that a speculator can exploit this conflict and force the blockholder to buy a disproportionately large amount to prevent value destruction. This is costly for the blockholder because the trades must sometimes be executed at inflated prices. Given reasonable constraints on short sellers, a sufficiently large blockholder will have the incentive to absorb these losses and prevent a bear raid. However, conditions exist under which outside intervention may be warranted. (C) 2012 Elsevier B.V. All rights reserved.