A Real Threat? Short Selling and CEO Turnover

85 Pages Posted: 7 Jun 2017 Last revised: 3 Nov 2018

See all articles by Anja Kunzmann

Anja Kunzmann

University of Mannheim - Department of Finance

Kristina Meier

University of Mannheim - Department of Finance

Date Written: November 2, 2018

Abstract

We examine the role of short sellers in forced turnovers. Controlling for various stock return measures, short interest predicts forced turnovers and is higher before turnovers that reveal more private information. Using Regulation SHO as a natural experiment, we show that unrestricted short selling increases the probability of forced turnovers for large firms. The effect is \emph{not} driven by a higher informativeness of stock prices. The relationship between short interest and forced turnovers is stronger in the presence of shareholder activism, while it does not vary with different board characteristics, suggesting activist shareholders are one channel for the effect.

Keywords: Short Selling, CEO Turnover, Real Effects of Financial Markets, Shareholder Activism, Regulation SHO

JEL Classification: G34, G18, G23, M51

Suggested Citation

Kunzmann, Anja and Meier, Kristina, A Real Threat? Short Selling and CEO Turnover (November 2, 2018). Available at SSRN: https://ssrn.com/abstract=2980450 or http://dx.doi.org/10.2139/ssrn.2980450

Anja Kunzmann

University of Mannheim - Department of Finance ( email )

L9, 1-2
Mannheim, 68161
Germany

Kristina Meier (Contact Author)

University of Mannheim - Department of Finance ( email )

L9, 1-2
Mannheim, 68131
Germany

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