Short-selling pressure and year-over-year MD&A modifications
Using the SEC's Regulation SHO as a natural experiment, we examine the effect of an increase in short selling pressure on the year-over-year modification of Management Discussion and Analysis (MD&A) section of firms' 10-K reports. We find that the elevated threat of short selling, resulting from the removal of short-sale constraint, causes the randomly selected pilot firms to modify the MD&A section less relative to the previous year than non-pilot firms during the Regulation SHO period (2005-2007). Moreover, cross-sectional analyses indicate that this effect is pronounced in firms with moderately good news; firms that increase investment or equity issuance; larger or overvalued firms; and firms with conservative managers, financial stability, and opaque information environments.
|Work Title||Short-selling pressure and year-over-year MD&A modifications|
|License||In Copyright (Rights Reserved)|
|Publication Date||December 18, 2021|
|Publisher Identifier (DOI)||
|Deposited||August 02, 2022|
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