Short Selling and Earnings Management: A Controlled Experiment

• 成果类型: Article
• 署名作者: Fang, Vivian W.; Huang, Allen H.; Karpoff, Jonathan M.
• 署名单位: University of Minnesota System; University of Minnesota Twin Cities; Hong Kong University of Science & Technology; University of Washington; University of Washington Seattle
• 刊物名称: JOURNAL OF FINANCE
• ISSN/ISSBN: 0022-1082
• DOI: 10.1111/jofi.12369
• 发表日期: 2016
• 页码: 1251-1294
• 关键词: SHORT-SALES CONSTRAINTS; SHORT SELLERS; Price discovery; market quality; performance; FUTURE; manipulation; BEHAVIOR; COMPENSATION; asymmetry

摘要

During 2005 to 2007, the SEC ordered a pilot program in which one-third of the Russell 3000 index were arbitrarily chosen as pilot stocks and exempted from shortsale price tests. Pilot firms' discretionary accruals and likelihood of marginally beating earnings targets decrease during this period, and revert to pre-experiment levelswhen the program ends. After the program starts, pilot firms are more likely to be caught for fraud initiated before the program, and their stock returns better incorporate earnings information. These results indicate that short selling, or its prospect, curbs earnings management, helps detect fraud, and improves price efficiency.