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[2019년 제 4차] Can Short Selling Constrain the Shift Between Accrual-based and Real Earnings Management?
작성자 : 관리자
조회수 : 43
게시일 :
2019-12-12
We study the causal effects of short selling on both accrual-based and real earnings management by exploiting an exogenous shock to short selling costs under SEC Regulation SHO’s pilot program. We find that the removal of short selling constraints leads to a reduction in discretionary accruals and, more importantly, a simultaneous reduction in real earnings management. Such disciplining effect on real earnings management is more pronounced when the cost associated with accrual earnings management is relatively high and managers are more entrenched. Furthermore, we also find that the effect is stronger in firms with high analyst coverage. Given prior findings that firms shift from accrual-based to real earning management after the increases in analyst coverage, our evidence suggests that short selling is superior to security analyst in constraining earnings management in that it does not lead to a shift from accrual-based earnings management to real earnings management.
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