Accounting irregularities and failure to deliver: An examination of the relationship between naked short sales and restatements
Abstract
Purpose
The purpose of this paper is to examine the relationship between naked short selling and accounting irregularities that cause a firm to issue a restatement.
Design/methodology/approach
Using the level of abnormal fails-to-deliver as a proxy for naked short selling, the paper looks for evidence of increased naked short selling in anticipation of, as well as in response to these announcements.
Findings
Larger firms and firms with a higher percentage of institutional ownership experience greater levels of fails prior to the announcement day, while smaller firms are more likely to be targets of naked short sellers after the announcement. The paper also finds that more transparent announcements are associated with more abnormal fails.
Originality/value
This paper is the first research to study the relation between naked short selling and accounting restatements.
Keywords
Acknowledgements
JEL Classifications — G10, G14, G28
Citation
E. Boyd, N., Marie Hibbert, A. and Pavlova, I. (2014), "Accounting irregularities and failure to deliver: An examination of the relationship between naked short sales and restatements", Managerial Finance, Vol. 40 No. 8, pp. 770-786. https://doi.org/10.1108/MF-08-2013-0219
Publisher
:Emerald Group Publishing Limited
Copyright © 2014, Emerald Group Publishing Limited