Short Sellers and Financial Misconduct

• 成果类型: Article
• 署名作者: Karpoff, Jonathan M.; Lou, Xiaoxia
• 署名单位: University of Washington; University of Washington Seattle; University of Delaware
• 刊物名称: JOURNAL OF FINANCE
• ISSN/ISSBN: 0022-1082
• DOI: 10.1111/j.1540-6261.2010.01597.x
• 发表日期: 2010
• 页码: 1879-1913
• 关键词: Managers; FIRMS

摘要

We examine whether short sellers detect firms that misrepresent their financial statements, and whether their trading conveys external costs or benefits to other investors. Abnormal short interest increases steadily in the 19 months before the misrepresentation is publicly revealed, particularly when the misconduct is severe. Short selling is associated with a faster time-to-discovery, and it dampens the share price inflation that occurs when firms misstate their earnings. These results indicate that short sellers anticipate the eventual discovery and severity of financial misconduct. They also convey external benefits, helping to uncover misconduct and keeping prices closer to fundamental values.