Active Short Selling By Hedge Funds

59 Pages Posted: 12 Sep 2018 Last revised: 22 Jun 2019

See all articles by Ian Appel

Ian Appel

Boston College - Carroll School of Management

Jordan Bulka

Boston College, Carroll School of Management

Vyacheslav Fos

Boston College - Department of Finance; European Corporate Governance Institute (ECGI); Centre for Economic Policy Research (CEPR)

Multiple version iconThere are 2 versions of this paper

Date Written: May 31, 2019

Abstract

Short selling campaigns by hedge funds have become increasingly common in the last decade. Using a hand-collected sample of 252 campaigns, we document abnormal returns for targets of approximately -7% around the announcement date. Firm stakeholders, including the media, plaintiffs’ attorneys, and other short sellers, play an important role in campaigns. Changes in aggregate short interest do not drive the effects on firm value and stakeholder behavior. Campaigns are primarily undertaken by activist hedge funds. Evidence suggests disclosure costs and information are important channels through which activism technology affects short selling.

Keywords: Activist Hedge Funds, Short Selling

JEL Classification: G23, G14

Suggested Citation

Appel, Ian and Bulka, Jordan and Fos, Vyacheslav, Active Short Selling By Hedge Funds (May 31, 2019). European Corporate Governance Institute - Finance Working Paper No. 609/2019. Available at SSRN: https://ssrn.com/abstract=3242516 or http://dx.doi.org/10.2139/ssrn.3242516

Ian Appel (Contact Author)

Boston College - Carroll School of Management ( email )

Carroll School of Management
140 Commonwealth Avenue
Chestnut Hill, MA 02467-3808
United States

Jordan Bulka

Boston College, Carroll School of Management ( email )

Boston, MA
United States

Vyacheslav Fos

Boston College - Department of Finance ( email )

Carroll School of Management
140 Commonwealth Avenue
Chestnut Hill, MA 02467-3808
United States

European Corporate Governance Institute (ECGI) ( email )

c/o ECARES ULB CP 114
B-1050 Brussels
Belgium

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

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