UK Short Selling Activity and Firm Performance

Panagiotis Andrikopoulos, James Clunie, Antonios Siganos

Research output: Contribution to journalArticle

4 Citations (Scopus)

Abstract

We use short selling data from Data Explorers from 2004 to 2012 to investigate the extent to which UK short sellers are informed investors, in accordance with Diamond and Verrecchia's (1987) hypothesis. Our results suggest that heavily-shorted stocks fail to consistently underperform their lightly-shorted counterparts. Short sellers' ability to predict firm performance is limited to firms that struggle for survival, such as firms about to enter bankruptcy or financial firms during the financial crisis. These results provide new evidence regarding the source of short-sellers' information and should be of interest to academics, financial regulators and market participants.

Original languageEnglish
Pages (from-to)1403-1417
Number of pages15
JournalJournal of Business Finance and Accounting
Volume39
Issue number9-10
DOIs
Publication statusPublished - Nov 2012
Externally publishedYes

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Keywords

  • Bankrupt firms
  • Financial crisis
  • Informed trading
  • Short sellers

ASJC Scopus subject areas

  • Accounting
  • Business, Management and Accounting (miscellaneous)
  • Finance

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