Disciplining Role of Short Sellers: Evidence From M&A Activity

Date
2021-05
Language
American English
Embargo Lift Date
Committee Members
Degree
Degree Year
Department
Grantor
Journal Title
Journal ISSN
Volume Title
Found At
Sage
Abstract

Prior research has focused on the influence of long investors (e.g., institutional investors) on merger-and-acquisition (M&A) decisions. This study investigates the role of short sellers in shaping managerial acquisitiveness and M&A decision quality. Short sellers impose a downward pressure on stock prices by disseminating negative information to the market. Given that managerial wealth and job security hinge on stock prices, top managers respond to increased short selling by refraining from excessive M&A activities because M&As could provide opportunities for short sellers to spread negative information and dampen stock prices. Furthermore, the negative influence of short sellers on managerial acquisitiveness is enhanced by the market for corporate control as an external governance mechanism and by CEO equity ownership as an internal governance mechanism. When firms with increasing short selling do engage in M&As, they gain higher M&A announcement returns and operating performance. We test our hypotheses using firms in the S&P 1500 from 2002 to 2014 and find support for our arguments.

Description
item.page.description.tableofcontents
item.page.relation.haspart
Cite As
Shi, W., Ndofor, H. A., & Hoskisson, R. E. (2021). Disciplining Role of Short Sellers: Evidence From M&A Activity. Journal of Management, 47(5), 1103–1133. https://doi.org/10.1177/0149206320912307
ISSN
0149-2063, 1557-1211
Publisher
Series/Report
Sponsorship
Major
Extent
Identifier
Relation
Journal
Journal of Management
Rights
Publisher Policy
Source
Author
Alternative Title
Type
Article
Number
Volume
Conference Dates
Conference Host
Conference Location
Conference Name
Conference Panel
Conference Secretariat Location
Version
Author's manuscript
Full Text Available at
This item is under embargo {{howLong}}