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Board independence and short selling

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  • Rahman, Anisur
  • Talukdar, Bakhtear
  • Bhuyan, Rafiqul

Abstract

This study investigates the relation between board independence and short selling. The findings suggest that board independence reduces short selling. This is consistent with the evidence in the current literature that board independence reduces information asymmetry and should limit informed trading based on private information. Further analyses suggest that the beneficial effect of board independence on limiting short selling is affected by the regularity of independent directors’ board meeting attendance, stock ownership by independent directors, and stock ownership by Chief Executive Officers. The robustness tests with the Sarbanes-Oxley Act of 2002 and propensity score-matched sample further corroborate the above findings.

Suggested Citation

  • Rahman, Anisur & Talukdar, Bakhtear & Bhuyan, Rafiqul, 2021. "Board independence and short selling," Finance Research Letters, Elsevier, vol. 39(C).
    • Handle: RePEc:eee:finlet:v:39:y:2021:i:c:s1544612319313170
    DOI: 10.1016/j.frl.2020.101616
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    References listed on IDEAS

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    Cited by:

    1. Sha, Yezhou & Shah, Syed Ghulam Meran & Sarfraz, Muddassar, 2023. "Short selling and SME irregular CEO succession: Witnessing the moderating role of earnings management," International Review of Economics & Finance, Elsevier, vol. 85(C), pages 163-173.

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    More about this item

    Keywords

    Independent directors; Short selling; Sarbanes-Oxley;
    All these keywords.

    JEL classification:

    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation

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