Responding to activist short sellers: allegations, firm responses, and outcomes

Brendel, J and Ryans, J (2021) Responding to activist short sellers: allegations, firm responses, and outcomes. Journal of Accounting Research, 59 (2). pp. 487-528. ISSN 0021-8456 OPEN ACCESS


This study provides descriptive evidence on how firms respond to activist short seller reports and how these responses are associated with outcomes for the targeted firms. We show that the frequency of these reports has grown substantially in recent years. While we find that firms respond only 31% of the time, this rate increases substantially when the report is accompanied by significantly negative abnormal returns and when the report contains new evidence. Not responding is associated with a less negative stock price response at report release and fewer adverse outcomes. Firms that launch internal investigations following the report release have significantly higher subsequent rates of stock exchange delisting and SEC enforcement actions, and lower rates of being acquired. Overall, our results highlight the impact of activist short sellers on target firms and that firm responses are associated with material outcomes.

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Item Type: Article
Subject Areas: Accounting
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© 2021 Accounting Research Center at the University of Chicago Booth School of Business & Wiley.

This is the peer reviewed version of the following article: Brendel J; Ryans J 'Responding to activist short sellers: allegations, firm responses, and outcomes', Journal of Accounting Research (forthcoming) which will be published in final form at This article may be used for non-commercial purposes in accordance with Wiley Terms and Conditions for Use of Self-Archived Versions

Date Deposited: 23 Feb 2021 13:24
Date of first compliant deposit: 22 Feb 2021
Subjects: Investment appraisal
Financial reporting
Disclosure of financial information
Last Modified: 22 Jun 2024 01:45

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