The Real Effects of Short-Selling Constraints

Grullon, Gustavo; Michenaud, Sébastien; Weston, J. Fred

doi:10.1093/rfs/hhv013

Cited by 274 publications

(199 citation statements)

References 47 publications

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“…In the US. experiment, the SEC drafted and established a pilot program exempting a third of the stocks in the Russell 3000 Index from uptick rules and other price restrictions (Diether, Lee, and Werner, 2009b;Grullon, Michenaud, and Weston, 2015). The selection of stocks was purely random.…”

Section: A Quasi-experiment: the Sho Pilot Programmentioning

confidence: 99%

“…The Regulation SHO Pilot Program, announced in 2004, randomly selected one-third of the stocks on the Russell 3000 Index to be exempt from uptick rules and other price restrictions. The relaxation of short-selling restrictions induced an exogenous change in short-selling cost (e.g., Diether, Lee, and Werner, 2009b;Grullon, Michenaud, and Weston, 2015). We thus exploit the program announcement upon which there is an exogenous shock to the perceived short-selling potential among pilot stocks and study whether it is associated with a change in insider sale activity.…”

mentioning

confidence: 99%

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Competition of the informed: Does the presence of short sellers affect insider selling?

Massa

Qian

et al. 2015

Journal of Financial Economics

123

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Section: A Quasi-experiment: the Sho Pilot Programmentioning

confidence: 99%

mentioning

confidence: 99%

Competition of the informed: Does the presence of short sellers affect insider selling?

Massa

Qian

et al. 2015

Journal of Financial Economics

123

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“…For example, Grullon et al (2015) hold that small pilot firms reduce equity issuance and investment during the pilot program and Deng et al (2016) find that crash risk is lower for small pilot firms at such times. Several studies using the pilot program have found more pronounced effects in small pilot firms.…”

Section: The Impact Of Short Selling On Cash Dividendsmentioning

confidence: 99%

“…the 2004 Regulation SHO pilot program (see next paragraph)) to investigate whether relaxing short-sale constraints affects corporate decisions, such as investment and financing (Grullon et al, 2015), earnings management (Fang et al, 2016) and design of compensation contracts (De Angelis et al, 2017). A strand of studies examines the relationship between short selling and corporate decisions using conventional fixed-effects regression analysis.…”

Section: Introductionmentioning

confidence: 99%

Short‐selling constraints and corporate payout policy

Chen

Zhu

Chang

2017

Accounting & Finance

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This study shows that managers adjust corporate payout policies to counteract intensified short-selling pressures following the removal of a short-selling constraint. We use a controlled experiment, the Regulation SHO pilot program, to find that changing the short-selling rule brings small companies to increase cash dividends, but not to repurchase more shares. Because paying dividends is costly, it is acknowledged as a more reliable signal of stock undervaluation than share repurchase. While our evidence suggests that companies select this payout strategy to deter predatory short sellers, it also shows that a short-selling activity has a causal effect on corporate payout decisions.

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“…Karpoff, Lou (2010) [4], Hirshleifer et al (2011) [5], investigated the effect of short selling mechanism on the quality of financial information; Grullon et al (2015) [6] and Jin et al (2015) [7] examined the impact of short selling mechanism on corporate investment behavior. There is little literature on the impact of short-selling on executive pay contracts.…”

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confidence: 99%

Short Selling and Executive Pay-for-Performance Sensitivity

Chen¹

2018

AJIBM

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Based on the launch of short selling in our country as the background, using the data of the a-share listed company from 2007 to 2016 in China, we built the model and empirically proved the impact of short selling on the target company executive compensation contracts. And then we discussed how the different supervision mechanism and the management rights affected their relationship. This paper finds out that the implementation of short selling improved Executive Pay-for-performance Sensitivity of the target company. In the weak supervision mechanism of listed companies, short selling can significantly improve the Executive Pay-for-performance Sensitivity, while in strong supervision mechanism of listed companies, short selling can't play a role; further from management right consideration, we found that in the higher management rights of listed companies, short selling can significantly improve its Executive Pay-for-performance Sensitivity, and in lower management rights of the listed company, short selling has no significant influence on management compensation contracts.

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The Real Effects of Short-Selling Constraints

Cited by 274 publications

References 47 publications

Competition of the informed: Does the presence of short sellers affect insider selling?

Competition of the informed: Does the presence of short sellers affect insider selling?

Short‐selling constraints and corporate payout policy

Short Selling and Executive Pay-for-Performance Sensitivity

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