Search results

1 – 10 of over 14000
Article
Publication date: 22 June 2012

Benjamin Blau and Tyler J. Brough

The purpose of this paper is to investigate what is denoted as episodes of concentrated short‐selling activity, or consecutive days of abnormal short‐sale activity in a…

Abstract

Purpose

The purpose of this paper is to investigate what is denoted as episodes of concentrated short‐selling activity, or consecutive days of abnormal short‐sale activity in a particular stock. The motivation to do so is two fold. First, US regulators and regulators in other countries have restricted short selling in order to protect the integrity of markets. Second, there is some conflicting academic research determining whether short sellers are manipulative in nature.

Design/methodology/approach

After defining these episodes by concentrated short selling, the paper examines returns before and after to determine whether these episodes target struggling stocks and whether these episodes predict negative returns.

Findings

Contrary to the argument that episodes of concentrated shorting activity target struggling stocks, it is found that these episodes follow periods of positive returns. Further, it is found that abnormal volatility and high trading volume also predict the occurrence of these episodes. These results suggest that concentrated shorting occurs in stocks that are increasing in price during periods of heterogeneity among investors expectations (Berkman et al.). It is also found that short sellers during bear raids are able to predict when prices reverse as returns become negative the day after the last day of the raid. Combined, the results suggest that bear raids by short sellers are important for the efficiency of markets.

Originality/value

The results from this study have important regulatory implications as well as implications regarding the informational efficiency of stock prices.

Details

International Journal of Managerial Finance, vol. 8 no. 3
Type: Research Article
ISSN: 1743-9132

Keywords

Article
Publication date: 11 August 2022

Lin Yuan, Hao Xia and Qiang Ye

There are two major strategies for short video advertising which are KOL (key opinion leader) endorsement and in-feed advertising. The authors aim to research the…

1548

Abstract

Purpose

There are two major strategies for short video advertising which are KOL (key opinion leader) endorsement and in-feed advertising. The authors aim to research the effectiveness of these two strategies for heterogeneous sellers.

Design/methodology/approach

The study employed a data set of users from Douyin. Using an endogenous treatment model, the study empirically examines the two strategies' effectiveness in attracting product traffic for online retailors at a short video app Douyin (TikTok).

Findings

The results show that the performance of in-feed advertising is higher when the seller's product is of lower price and when the seller has smaller cumulative video exposure. In addition, KOL endorsement is effective regardless of the product price, but performs better when the seller has larger cumulative video exposure.

Originality/value

To the best of the authors’ knowledge, this study is one of the first to explore the interaction effects of two major advertising strategies, KOL endorsement and in-feed advertising on short video platforms. The findings provide important theoretical contributions and practical implications.

Details

Industrial Management & Data Systems, vol. 122 no. 8
Type: Research Article
ISSN: 0263-5577

Keywords

Article
Publication date: 10 January 2018

George Gao, Qingzhong Ma and David Ng

The purpose of this paper is to empirically examine whether corporate insiders extract information from activity of outsiders, specifically the short sellers.

Abstract

Purpose

The purpose of this paper is to empirically examine whether corporate insiders extract information from activity of outsiders, specifically the short sellers.

Design/methodology/approach

Using portfolio approach and Fama-MacBeth regressions, this study examines the relation between short interest and subsequent insider trading activities.

Findings

The following results are reported. First, there is a strong inverse relation between short selling and subsequent insider trading, which is partially due to common private information and same target firm characteristics. Second, insiders extract information from shorts. This information extraction effect is more pronounced for firms whose insiders have stronger incentives to extract shorts information (insider purchases, higher short sale constraints, and better information environments). Third, during the September 2008 shorting ban, the information extraction affect disappeared among the large banned firms, whose shorting activities were distorted.

Research limitations/implications

The findings contradict the of-cited accusations corporate executives hold against short sellers. Instead, corporate insiders appear to trade in the same direction as suggested by shorting activities.

Practical implications

Among the vocal critics of short sellers are corporate insiders, who allege that short sellers beat down their stock prices. Many corporations even engage in stock repurchases to show confidence that the stock will perform well going forward despite the short sellers’ actions. This paper’s analysis on their personal portfolios suggests the other way around.

Originality/value

By focusing on how corporate insider trading is related to shorts information, this paper sheds new light on whether corporate decisions convey the true information the corporate insiders possess.

Details

China Finance Review International, vol. 8 no. 4
Type: Research Article
ISSN: 2044-1398

Keywords

Article
Publication date: 22 June 2012

Ethan Watson and Mary C. Funck

Research draws the distinction between noise traders and informed traders. Research also documents market biases in equity returns due to cloud cover, a non‐informational…

2322

Abstract

Purpose

Research draws the distinction between noise traders and informed traders. Research also documents market biases in equity returns due to cloud cover, a non‐informational (noise) event, showing that returns decrease on cloudy days. The purpose of this paper is to investigate the trading behaviour of shortsellers, who are considered informed traders, conditioning on the level of cloudiness, and find an increase in short selling with the level of cloudiness. Additionally, the paper finds decreases in short selling the three days prior to a cloudy day (or series of cloudy days).

Design/methodology/approach

The authors replicate the weather anomaly in stock returns reported in the literature for the sample period, and then study the trading behaviour of short sellers conditioned on cloud cover. Additionally the authors treat cloud cover as an event and study short selling volume in the pre‐event window.

Findings

The paper finds an increase in short selling with the level of cloudiness. Additionally, the paper finds decreases in short selling, relative to the event day(s), in the three days prior to a cloudy day (or series of cloudy days).

Originality/value

The authors believe that they are the first to document that weather impacts short seller's trading behaviour. The authors argue that the results point towards a behavioural bias.

Details

International Journal of Managerial Finance, vol. 8 no. 3
Type: Research Article
ISSN: 1743-9132

Keywords

Article
Publication date: 4 September 2020

Fawzi Hyder and Mahsa Khoshnoud

This paper examines how sophisticated and better-informed investors, such as short sellers, trade on information along the supply chain. Given the economic linkages…

Abstract

Purpose

This paper examines how sophisticated and better-informed investors, such as short sellers, trade on information along the supply chain. Given the economic linkages between suppliers and customers, one would expect short sellers to trade on such information and to capitalize on investors' inattention to such economic links.

Design/methodology/approach

This paper uses both multivariate regression analysis and portfolio analysis where the time series averages of equally weighted monthly portfolio returns are reported to explore the abnormal returns of long-short trading strategies.

Findings

Results indicate that short interest predicts unexpected earnings news, consistent with short sellers extracting information from economic relationships. There is a strong negative relationship between short interest in the supplier firm and the one-month future stock return of the customer firm. This negative relation significantly persists for at least 12 months. One plausible channel explaining the information content of supplier (customer) firm's short interest for the customer (supplier) firms is the short sale constraints on the customer (supplier) firms.

Originality/value

The paper addresses a gap in the literature by examining whether short selling in a firm in the months leading up to a customer's (supplier's) negative shock is negatively correlated to the customer's (supplier's) future performance. Overall, the findings suggest that short sellers play an important role in the price discovery of related firms in the supply chain, which is beyond the direct effects documented in prior literature.

Details

Review of Behavioral Finance, vol. 13 no. 5
Type: Research Article
ISSN: 1940-5979

Keywords

Article
Publication date: 23 March 2012

Sean Thomas

If a seller fails to deliver the correct quantity, the buyer may reject the goods in accordance with the Sale of Goods Act 1979, section 30(1). The nature of this right to…

Abstract

Purpose

If a seller fails to deliver the correct quantity, the buyer may reject the goods in accordance with the Sale of Goods Act 1979, section 30(1). The nature of this right to reject is unclear, and whether breach by short delivery will suffice to terminate the contract is also unclear. The purpose of this paper is to clarify this area of law.

Design/methodology/approach

The focus is on the combined case‐law and academic commentary on the topic of short delivery, and the broader issue of termination.

Findings

The paper suggests that breach by short delivery does terminate the contract. It suggests that the right to cure cannot provide an entirely satisfactory response for victims of short delivery. The paper also proposes a reform of the Sale of Goods Act 1979 to take this into account.

Research limitations/implications

This research mainly focused on the current legal position. Further research on the historical development of the rules on short delivery, which were crystallised in the Sale of Goods Act 1893, will provide valuable insights into this area of law.

Practical implications

The proposal for reform could have a practical benefit in terms of protecting buyers from the danger of short delivery, by providing them with a more secure remedy than what appears to be currently available.

Originality/value

To the extent of the author's knowledge, this is the first dedicated analysis of short delivery in the literature.

Details

Journal of International Trade Law and Policy, vol. 11 no. 1
Type: Research Article
ISSN: 1477-0024

Keywords

Open Access
Article
Publication date: 27 July 2020

Jay M. Chung and Shu-Feng Wang

This paper aims to investigate short selling and stock price crash risk. The authors find that short selling is positively associated with one-month-ahead stock price…

Abstract

This paper aims to investigate short selling and stock price crash risk. The authors find that short selling is positively associated with one-month-ahead stock price crash risk, consistent with the literature showing that short sellers are informed traders. The authors attribute this prediction ability to the information short sellers receive from foreign investors with high levels of ownership in a firm. The results shed light on policy issues regarding short selling regulation.

Details

Journal of Derivatives and Quantitative Studies: 선물연구, vol. 28 no. 2
Type: Research Article
ISSN: 1229-988X

Keywords

Article
Publication date: 28 July 2021

Glenn Kit Foong Ho, Sirimon Treepongkaruna and Chaiyuth Padungsaksawasdi

This paper examines whether short sellers aggravate volatility in the Australian stock market by using five different realized volatility (RV) measures during a more stable period.

Abstract

Purpose

This paper examines whether short sellers aggravate volatility in the Australian stock market by using five different realized volatility (RV) measures during a more stable period.

Design/methodology/approach

The authors develop a measure to capture the abnormal level of short selling for each stock and examine the bivariate and trivariate dynamic relationships between abnormal short selling and five volatility measures: the RV, continuous and jump components of RV, upside and downside volatilities.

Findings

Overall, the findings indicate a weak association between abnormal short selling and volatility. Where the relationships are significant, the authors generally find that lagged abnormal short selling is negatively associated with both upside and downside volatilities. In general, short selling does not drive or amplify the decline in stock prices.

Originality/value

This paper contributes to existing literature in various aspects. First, the authors offer evidence on the relationship between abnormal short selling and volatility in a general market condition while existing studies often found mixed results of the effects of short selling on volatility around extreme events. Second, the authors add to the literature on the volume-volatility relation by introducing abnormal short selling. Although abnormal short volume does not supplant the number of trades in the volume-volatility relation, it has some incremental, albeit negative, effect on volatility. Finally, the study provides further evidence for the debate on the desirability of short sellers in financial markets.

Details

Managerial Finance, vol. 47 no. 12
Type: Research Article
ISSN: 0307-4358

Keywords

Article
Publication date: 5 May 2015

Maysam Ahmadvand, Hadi Khajezadeh Dezfuli and Mohamad Javad Sadehvand

This paper aims to first explain short selling and its benefits and damages; then, using experts’ opinions and Technique for Order of Preference by Similarity to Ideal…

Abstract

Purpose

This paper aims to first explain short selling and its benefits and damages; then, using experts’ opinions and Technique for Order of Preference by Similarity to Ideal Solution (TOPSIS) method as well as based on the legal, financial and jurisprudential criteria adopted, evaluate and prioritize Islamic alternatives to short selling; and finally, introduce the most proper approach for implementing it in Iran’s stock market.

Design/methodology/approach

The methods applied in the paper are as follows: Library method to collect the required data for developing the theoretical and jurisprudential foundations of the study, identifying the appropriate criteria for prioritizing; the alternative methods for short selling in the Islamic markets; and the field method to determine the level of significance of the ranking criteria and prioritize the alternative methods for short selling in the Islamic markets on the basis of such criteria. The alternative methods for short selling in Iranian stock market were identified and analyzed jurisprudentially and legally. Afterwards, these strategies were prioritized based on the (legislative, financial and jurisprudential) criteria which were adopted in the form of Delphi from the related literature, research and expert opinions by means of TOPSIS approach. The method with the highest ranking will be introduced as the alternative method for short selling.

Findings

The paper suggests that among all Islamic alternatives to short selling, based on experts’ opinions and legal considerations, method of combining Murabaha and Wa’ad is the most proper strategy in Iranian stock market.

Research limitations/implications

An important limitation we faced in this study was limited familiarity of Iran, capital market participants with Islamic finance concepts including Islamic alternatives to short selling. Therefore, designed questionnaire was sent only to participants who had experience in the field of Islamic finance that they were not more than 31 people. Of course, in this study, large sample size was not necessary because the questionnaire was completed by experts, and therefore, results were scientific and reliable.

Originality/value

One of the transaction strategies which significantly contributes to the enhancement of market liquidity is short selling. However, this strategy is not applicable to the Islamic stock markets because of its contradictions with a number of Islamic laws. Therefore, Islamic financial researchers have attempted to design relevant legal mechanisms drawing on the Islamic contracts to make use of the merits of this transaction strategy. In addition to introducing short selling and its demerits for the stock market, the paper explored the alternative methods and proposed the most proper one for implementing in Iranian stock market.

Details

Qualitative Research in Financial Markets, vol. 7 no. 2
Type: Research Article
ISSN: 1755-4179

Keywords

Article
Publication date: 3 November 2021

Reuben Segara and Jin Young Yang

This study investigates the valuation motive for increasing share repurchases: the authors analyze the trading dynamics between short sellers, institutional investors and…

Abstract

Purpose

This study investigates the valuation motive for increasing share repurchases: the authors analyze the trading dynamics between short sellers, institutional investors and the firm itself around share repurchases.

Design/methodology/approach

The authors examine the valuation motive for share repurchases through an analysis of firm, institutional and short sellers’ trading behavior. The firm-level panel regression models using firm-quarter observations in the sample period are estimated.

Findings

The authors find that firms repurchase more intensely against increased short selling and that institutional investors trade in parallel with the repurchasing firm.

Originality/value

Results suggest that firms disagree with short sellers’ intrinsic valuation of the firm, which is consistent with findings of recent studies such as Muzere (2019) and Bargeron and Bonaimé (2020).

Details

Managerial Finance, vol. 48 no. 2
Type: Research Article
ISSN: 0307-4358

Keywords

1 – 10 of over 14000