IDEAS home Printed from https://ideas.repec.org/a/taf/acctbr/v54y2024i6p730-755.html
   My bibliography  Save this article

Short selling pressure and tone management: evidence from regulation SHO

Author

Listed:
  • Ruichang Lu
  • Tenghui Wang
  • Xiaojun Zhang

Abstract

We study the causal effect of short selling on managers’ tone during earnings conference calls. Utilising Regulation SHO, a pilot scheme governing short-selling activity, we find that pilot firms with relaxed short-selling constraints use more negative tone. This effect is more pronounced for firms that are easier to short sell, those where managers have an incentive to manipulate tone, and those that engage in less earnings management. Moreover, the negative relationship between tone and future earnings no longer holds for the pilot firms after Reg SHO, suggesting that the tone of conference calls by pilot firms better reflects their future earnings after the regulation. Overall, our findings suggest that short sellers play a corporate governance role in tone management.

Suggested Citation

  • Ruichang Lu & Tenghui Wang & Xiaojun Zhang, 2024. "Short selling pressure and tone management: evidence from regulation SHO," Accounting and Business Research, Taylor & Francis Journals, vol. 54(6), pages 730-755, September.
  • Handle: RePEc:taf:acctbr:v:54:y:2024:i:6:p:730-755
    DOI: 10.1080/00014788.2023.2227567
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1080/00014788.2023.2227567
    Download Restriction: Access to full text is restricted to subscribers.

    File URL: https://libkey.io/10.1080/00014788.2023.2227567?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:taf:acctbr:v:54:y:2024:i:6:p:730-755. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/RABR20 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.