Operating Under the Radar : Short Selling Pressure and Employee Injuries

This study examines how short sellers affect the workplace safety of firm employees. Relying on a quasi-natural experiment instituted by Reg SHO, we find that short selling pressure causes an increase in employee injuries. This effect is more pronounced for firms with greater incentives to meet/beat predetermined targets, those with higher analyst coverage, those with more short-term institutional ownership, or remote establishments. Further analyses reveal that protection from a labor union can help to mitigate the negative effect of short selling pressure on workplace safety. Overall, our findings indicate that short sellers emphasize pecuniary benefits but overlook nonpecuniary losses. The resultant cost is borne by the front-line employees. Our paper provides first-hand evidence of a dead-weight loss due to short selling pressure