Do Short Sellers Target Firms with Poor Earnings Quality? Evidence from Earnings Restatements

By Hemang Desai, Srinivasan Krishnamurthy, K. Venkataraman. 2006

323 citations recorded by the source corpus.

View Paper: https://www.semanticscholar.org/paper/7d5827c68a78d24dce8919d167a418c16e26fdaf

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Citations in the corpus

Do Short Sellers Front-Run Insider Sales? (2013, unknown): “In addition, Desai et al. (2006) show that short sellers target firms that subsequently restate earnings, suggesting that short sellers consider accounting information quality in their decision process.”
Does Earnings Quality Affect Information Asymmetry? Evidence from Trading Costs*: Earnings Quality and Information Asymmetry (2013, unknown): “, Diamond 1985; Diamond and Verrecchia 1991) predict that higher-quality disclosures lower information asymmetry between market participants, and as a result reduce the cost of capital. Welker (1995) is the first empirical study to document an inverse association between disclosure quality and bid-a”
Short interest and stock price crash risk (2015, background): “Similarly, Efendi et al. (2005) and Desai et al. (2006) investigate short selling around the accounting restatements for a sample compiled by the Government Accountability Office (GAO).”
Which Shorts Are Informed (2008, unknown): “For example, Brent, Morse, and Stice (1990) find that monthly short interest does not predict either the cross-section or time-series behavior of returns, Asquith, Pathak, and Ritter (2004) find predictive power only in the smallest stocks, while authors such as Asquith and Meulbroek (1996) and Desa”
Short Arbitrage, Return Asymmetry, and the Accrual Anomaly (2011, unknown): “Consistent with short interest at least to some extent representing sophisticated arbitrage of mispricing, short interest is a negative predictor of subsequent abnormal returns (Asquith Pathak, and Ritter 2005, Desai, Ramesh, Thiagarajan, and Balachandran 2002, Jones and Lamont 2002, Boehmer, Jones,”
Short Sellers and Financial Misconduct (2010, background): “Asquith and Meulbroek (1996) and Desai et al. (2002) find that stocks that are highly shorted in one month tend to underperform in the next month, and Diether, Lee, and Werner (2009) find that short sellers appear to take advantage of short-term overreaction in stock prices.”
Competition of the Informed: Does the Presence of Short Sellers Affect Insider Selling? (2015, background): “It is well-documented that short sellers are able to identify overvalued or “suspicious” stocks (e.g., Dechow et al., 2001; Christophe et al., 2004; Desai et al., 2006; Cohen et al., 2007, Christophe et al., 2010; Karpoff and Lou, 2010; Hirshleifer et al., 2011, Ljungqvist and Qian, 2014).”
Short-Sale Strategies and Return Predictability (2009, background): “The second alternative suggests that market frictions (Miller (1977), Diamond and Verrecchia (1987), Harrison and Kreps (1978), and Scheinkman and Xiong (2003)) or behavioral biases (DeBondt and Thaler (1985), Daniel et al (1998), Barberis et al (1998), and Hong and Stein (1999)) may cause price to ”
Understanding Earnings Quality: A Review of the Proxies, Their Determinants and Their Consequences (2010, methodology): “Managers/Directors: Managers at restatement firms experience significantly higher turnover (Desai et al., 2006; Hennes et al., 2008) and director turnover (Srinivasan, 2005) than control firms. Desai et al. (2006) also find that it is more difficult for these displaced managers to find subsequent em”
Informed trading before analyst downgrades: Evidence from short sellers (2010, background): “An important issue is whether this informed trading arises because short sellers benefit from a tip they receive from insiders aware of a forthcoming downgrade announcement (the tipping hypothesis) or because short sellers establish positions based upon skillful analysis of the targeted firm’s poor…”
Accruals Quality and Analyst Coverage (2012, unknown): “Specifically, investors do not understand the properties of accruals and do not fully incorporate this information into prices (e.g., Bradshawet al., 2001; Desai et al., 2006; Sloan, 1996).”
Rank and File Employees and the Discovery of Misreporting: The Role of Stock Options (2016, unknown): “7 See http://en.wikipedia.org/wiki/SEC_Office_of_the_Whistleblower.”