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We show that stock prices are more accurate when short sellers are more active. First, in a large panel of NYSE-listed stocks, intraday informational efficiency of prices improves with greater shorting flow. Second, at monthly and annual horizons, more shorting flow accelerates the incorporation of public information into prices. Third, greater shorting flow reduces post-earnings announcement drift for negative earnings surprises. Fourth, short sellers change their trading around extreme return events in a way that aids price discovery and reduces divergence from fundamental values. These results are robust to various econometric specifications and their magnitude is economically meaningful.

Managers frequently attribute the news in their earnings forecasts to various economic events. Using textual analysis, we identify the economic factors underlying earnings news from press releases. We document a wide range of industry-wide shocks and firm-specific actions to which the earnings news in management forecasts is attributed. As expected, earnings attributions significantly affect peer firms' price reactions to the earnings news. Specifically, earnings news attributed to industry-wide trends or firm structural changes leads to positive information transfers but earnings news attributed to firm competitive moves triggers negative information transfers. Information transfers are much stronger when each economic factor is mentioned the first time in a given industry-year. Further analysis reveals that the strength of information transfers varies with firm-level rivalry within the industry (i.e., similar business strategies, market position, and level of competition). Attribution des r esultats et transferts d'information *Accepted by Sudipta Basu. We thank Sudipta Basu, two anonymous reviewers,

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We use a large sample from 2001 -2009 that incorporates intraday transactions data from 39 exchanges and an average of 12,800 different common stocks to assess the effect of algorithmic trading (AT) on firms' capital raising activities. Greater AT intensity reduces net equity issues over the next year, but this is only partly driven by AT's effect on proceeds from new securities issues. Our findings suggest that the main driver of this relationship is AT's effect on share repurchases.