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Conference Paper: Does short selling discipline overinvestment?

TitleDoes short selling discipline overinvestment?
Authors
KeywordsShort selling
Empire building
Governance
Mergers and acquisitions
Regulation SHO-PILOT Program
Issue Date2015
PublisherSocial Science Electronic Publishing, Inc..
Citation
The 2015 Finance Down Under (FDU) Conference, University of Melbourne, Melbourne, Australia, 5-7 March 2015. In Social Science Research Network, 2015, p. 1-54 How to Cite?
AbstractWe explore the disciplining effect of short selling on overinvestment. Results show that firms with more stock lending supply have higher abnormal stock announcement returns of acquiring firms, lower subsequent abnormal capital investments, and longer spells between large investments, and higher subsequent Tobin’s Q and ROA. Alleviating the endogeneity concern, our multivariate difference-in-difference analysis shows that this disciplinary force is more effective for firms in the Regulation SHO-PILOT Program. We identify two mechanisms through which short selling disciplines managers: managers’ wealth-performance sensitivity and likelihood of hostile takeovers. Additionally, the disciplinary force only exists for non-financial-constrained firms and non-all-cash M&A deals.
DescriptionConference Theme: Building on the Best from the Cellars of Finance
Parallel Sessions 1 - Overinvestment, Underinvestment, Just Right Investment
Persistent Identifierhttp://hdl.handle.net/10722/208755
SSRN

 

DC FieldValueLanguage
dc.contributor.authorChang, EC-
dc.contributor.authorLin, TC-
dc.contributor.authorMa, X-
dc.date.accessioned2015-03-18T09:10:11Z-
dc.date.available2015-03-18T09:10:11Z-
dc.date.issued2015-
dc.identifier.citationThe 2015 Finance Down Under (FDU) Conference, University of Melbourne, Melbourne, Australia, 5-7 March 2015. In Social Science Research Network, 2015, p. 1-54-
dc.identifier.urihttp://hdl.handle.net/10722/208755-
dc.descriptionConference Theme: Building on the Best from the Cellars of Finance-
dc.descriptionParallel Sessions 1 - Overinvestment, Underinvestment, Just Right Investment-
dc.description.abstractWe explore the disciplining effect of short selling on overinvestment. Results show that firms with more stock lending supply have higher abnormal stock announcement returns of acquiring firms, lower subsequent abnormal capital investments, and longer spells between large investments, and higher subsequent Tobin’s Q and ROA. Alleviating the endogeneity concern, our multivariate difference-in-difference analysis shows that this disciplinary force is more effective for firms in the Regulation SHO-PILOT Program. We identify two mechanisms through which short selling disciplines managers: managers’ wealth-performance sensitivity and likelihood of hostile takeovers. Additionally, the disciplinary force only exists for non-financial-constrained firms and non-all-cash M&A deals.-
dc.languageeng-
dc.publisherSocial Science Electronic Publishing, Inc..-
dc.relation.ispartofFinance Down Under (FDU) Conference 2015-
dc.rights© 2011 Social Science Electronic Publishing, Inc. All Rights Reserved. For personal & noncommercial use apply only to specific documents and use of specific SSRN-provided statistics and other information.-
dc.subjectShort selling-
dc.subjectEmpire building-
dc.subjectGovernance-
dc.subjectMergers and acquisitions-
dc.subjectRegulation SHO-PILOT Program-
dc.titleDoes short selling discipline overinvestment?-
dc.typeConference_Paper-
dc.identifier.emailChang, EC: ecchang@hku.hk-
dc.identifier.emailLin, TC: chunlin@hku.hk-
dc.identifier.emailMa, X: xrma@business.hku.hk-
dc.identifier.authorityChang, EC=rp01050-
dc.identifier.authorityLin, TC=rp01077-
dc.description.naturelink_to_OA_fulltext-
dc.identifier.doi10.2139/ssrn.2348193-
dc.identifier.hkuros242730-
dc.identifier.spage1-
dc.identifier.epage54-
dc.publisher.placeUnited States-
dc.identifier.ssrn2348193-

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