Short sellers play an important role in the transmission of negative information into price. Because short selling leads to negative price pressure, short sellers have been cast as villains throughout history. Perhaps because of this negative sentiment, investors are often reluctant to publicly disclose short positions.
Yet, recent years have seen a new phenomenon: high-profile short-selling campaigns by hedge funds. In this study, the authors undertake a comprehensive analysis of short-selling campaigns by hedge funds, showing that such campaigns are associated with abnormal returns for targets of approximately -7% as well as changes in the behaviour of stakeholders (e.g., other short sellers). The seminar will also consider the perspective of an experienced practitioner and allow time for audience questions.