Active Short Selling by Hedge Funds

56 Pages Posted: 11 Jun 2019 Last revised: 29 Jul 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)

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Date Written: June 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.

Suggested Citation

Appel, Ian and Bulka, Jordan and Fos, Vyacheslav, Active Short Selling by Hedge Funds (June 2019). CEPR Discussion Paper No. DP13788, Available at SSRN: https://ssrn.com/abstract=3401875

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 the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

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