Massa et al. (2015) show that corporate insiders become more opportunistic by selling more and faster in competition with short sellers. By considering the possibility that short sellers may react to insider trading, we propose a new hypothesis that short sellers play a disciplinary role in...

We measure ex-ante expectation errors by identifying sporadic versus persistent total asset growth ex-ante. Corporate profitability of high (low) asset-growth firms remains inferior (superior) after temporary asset expansion (contraction), hence ex-ante expectation errors are high. Corporate...

We empirically evaluate the predictions of the mispricing hypothesis with limits-to-arbitrage suggested by Shleifer and Vishny (1997) and the q-theory with investment frictions proposed by Li and Zhang (2010) on the negative relation between asset growth and average stock returns. We conduct...

We investigate whether and how firm-level political uncertainty affects firms' bank loan contracting. We find that firms facing higher firm-level political uncertainty are charged higher bank loan costs. This impact is amplified for firms with higher degrees of information asymmetry and firms...

Enterprise bonds with higher demand of retail investors are traded at significantly higher prices in the exchange market than the same bonds traded by institutional investors in the interbank market in China. The price difference is higher for bonds with higher yield to maturity, lower supply,...

The momentum life cycle (MLC) hypothesis first proposed by Lee and Swaminathan (2000) applies also to global markets. Early-stage strategies significantly outperform the late-stage and conventional strategies in most countries. Individualism culture is positively associated with late-stage but...

Firms that substantially increase capital investments subsequently achieve negative benchmark-adjusted returns. The negative abnormal capital investment/return relation is shown to be stronger for firms that have greater investment discretion, i.e., firms with higher cash flows and lower debt...

This paper examines the extent to which cultural differences influence the returns of momentum strategies. We measure cultural differences using an index of individualism developed by Hofstede (2001), which we argue is related to overconfidence and self-attribution bias. Our cross-country...

The evidence from this study shows that the quot;accruals anomalyquot; and the quot;capital investment anomalyquot; are distinct, even though capital investments and accruals may be related in a certain way. The results also indicate that, after adjustment for the Fama-French three risk factors,...

We examine short sellers' use of textual information in annual reports for shorting activities. We find that more uncertainty and negative words in annual reports are associated with greater abnormal shorting volume. Short selling motivated by textual information negatively predicts stock price...