Should Investors Follow the Prophets or the Bears? Evidence on the Use of Public Information by Analysts and Short Sellers

Should Investors Follow the Prophets or the Bears? Evidence on the Use of Public Information by Analysts and Short Sellers
Author: Michael S. Drake
Publisher:
Total Pages: 46
Release: 2010
Genre:
ISBN:

We investigate whether shorts and analysts differ in their use of fundamental and other information that is predictive of future returns. Remarkably, open short interest is significantly associated in the expected direction with all eleven variables examined. In contrast, analysts tend to positively recommend stocks with high growth, high accruals, and low book-to-market ratios -- despite these variables having a negative association with future returns. These results suggest that short sellers can serve as an alternative information intermediary for investors. We then investigate the profitability of using short interest in trading. We find abnormal returns (1.11 percent per month) from a zero-investment strategy that 1) shorts firms with highly favorable analyst recommendations (buy signal) but high short interest (sell signal), and 2) buys firms with highly unfavorable analyst recommendations (sell signal) but low short interest (buy signal). Short interest, therefore, captures predictive information that can be used by investors in trading against analysts' recommendations to increase returns.

Issues in Accounting, Administration, and Corporate Governance: 2012 Edition

Issues in Accounting, Administration, and Corporate Governance: 2012 Edition
Author:
Publisher: ScholarlyEditions
Total Pages: 71
Release: 2013-01-10
Genre: Business & Economics
ISBN: 1481648543

Issues in Accounting, Administration, and Corporate Governance: 2012 Edition is a ScholarlyBrief™ that delivers timely, authoritative, comprehensive, and specialized information about Business Ethics in a concise format. The editors have built Issues in Accounting, Administration, and Corporate Governance: 2012 Edition on the vast information databases of ScholarlyNews.™ You can expect the information about Business Ethics in this eBook to be deeper than what you can access anywhere else, as well as consistently reliable, authoritative, informed, and relevant. The content of Issues in Accounting, Administration, and Corporate Governance: 2012 Edition has been produced by the world’s leading scientists, engineers, analysts, research institutions, and companies. All of the content is from peer-reviewed sources, and all of it is written, assembled, and edited by the editors at ScholarlyEditions™ and available exclusively from us. You now have a source you can cite with authority, confidence, and credibility. More information is available at http://www.ScholarlyEditions.com/.

Principles of Financial Regulation

Principles of Financial Regulation
Author: John Armour
Publisher: Oxford University Press
Total Pages: 780
Release: 2016-08-04
Genre: Law
ISBN: 0191090050

The financial crisis of 2007-9 revealed serious failings in the regulation of financial institutions and markets, and prompted a fundamental reconsideration of the design of financial regulation. As the financial system has become ever-more complex and interconnected, the pace of evolution continues to accelerate. It is now clear that regulation must focus on the financial system as a whole, but this poses significant challenges for regulators. Principles of Financial Regulation describes how to address those challenges. Examining the subject from a holistic and multidisciplinary perspective, Principles of Financial Regulation considers the underlying policies and the objectives of regulation by drawing on economics, finance, and law methodologies. The volume examines regulation in a purposive and dynamic way by framing the book in terms of what the financial system does, rather than what financial regulation is. By analysing specific regulatory measures, the book provides readers to the opportunity to assess regulatory choices on specific policy issues and encourages critical reflection on the design of regulation.

Advances in Taxation

Advances in Taxation
Author: John Hasseldine
Publisher: Emerald Group Publishing
Total Pages: 221
Release: 2018-11-15
Genre: Business & Economics
ISBN: 1787564169

Eight chapters cover short selling and corporate tax avoidance, Fin48 and earnings management, the U.S. Jobs and Growth Tax Relief Reconciliation Act of 2003, the impact of social identity on reasonable compensation cases, FACTA, corporate tax compliance in Bangladesh, enforced tax compliance behavior in Malaysia, and tax morale in Greece.

Shock Markets

Shock Markets
Author: Robert I. Webb
Publisher: FT Press
Total Pages: 297
Release: 2013-03-26
Genre: Business & Economics
ISBN: 0133345807

Don't fear crises: use them as opportunities to make money! Shock Markets shows traders and investors exactly how to do it -- with exceptional detail, not vague handwaving. Robert Webb and Alexander Webb offer meticulous breakdowns of recent crises, revealing how they impacted both individual stocks and the market as a whole -- and helping you create detailed game plans for profiting from future shocks. By fusing real-life trading examples with rigorous moment-by-moment analysis of price changes, they give you tools to survive and thrive in even the most volatile markets. This accessible, actionable book answers crucial questions like: What moves stock prices? What moves the overall market? How can you profit from understanding catalysts that precipitate sudden sharp changes in stock prices? From the actions of corporate executives to regulatory decisions, earnings announcements to merger deals, lawsuits to settlements, macroeconomic reports to the policy actions of foreign governments, seemingly remote factors can have a huge, sudden impact on stocks in today's interconnected markets. Shock Markets illuminates these catalysts, and demonstrates their shifting behavior during fads, fashions, bubbles, crashes, and market crises. The focus is completely practical: helping savvy traders uncover profit where others find only peril.

Regulating Eu Capital Markets Union

Regulating Eu Capital Markets Union
Author: Rüdiger Veil
Publisher: Oxford University Press
Total Pages: 545
Release: 2024-06-14
Genre: Law
ISBN: 019288266X

This is the first of a two-volume series that examines the current EU capital markets regimes and explores codification as a means for achieving a true single market for capital in Europe.

Corporate Finance Law

Corporate Finance Law
Author: Louise Gullifer
Publisher: Bloomsbury Publishing
Total Pages: 852
Release: 2015-10-22
Genre: Law
ISBN: 1782259597

The second edition of this acclaimed book continues to provide a discussion of key theoretical and policy issues in corporate finance law. Fully updated, it reflects developments in the law and the markets in the continuing aftermath of the Global Financial Crisis. One of its distinctive features is that it gives equal coverage to both the equity and debt sides of corporate finance law, and seeks, where possible, to compare the two. This book covers a broad range of topics regarding the debt and equity-raising choices of companies of all sizes, from SMEs to the largest publicly traded enterprises, and the mechanisms by which those providing capital are protected. Each chapter analyses the present law critically so as to enable the reader to understand the difficulties, risks and tensions in this area of law, and the attempts made by the legislature and the courts, as well as the parties involved, to deal with them. This book will be of interest to practitioners, academics and students engaged in the practice and study of corporate finance law.

Investment Intelligence from Insider Trading

Investment Intelligence from Insider Trading
Author: H. Nejat Seyhun
Publisher: MIT Press
Total Pages: 452
Release: 2000-02-28
Genre: Business & Economics
ISBN: 9780262692342

Learn how to profit from information about insider trading. The term insider trading refers to the stock transactions of the officers, directors, and large shareholders of a firm. Many investors believe that corporate insiders, informed about their firms' prospects, buy and sell their own firm's stock at favorable times, reaping significant profits. Given the extra costs and risks of an active trading strategy, the key question for stock market investors is whether the publicly available insider-trading information can help them to outperform a simple passive index fund. Basing his insights on an exhaustive data set that captures information on all reported insider trading in all publicly held firms over the past twenty-one years—over one million transactions!—H. Nejat Seyhun shows how investors can use insider information to their advantage. He documents the magnitude and duration of the stock price movements following insider trading, determinants of insiders' profits, and the risks associated with imitating insider trading. He looks at the likely performance of individual firms and of the overall stock market, and compares the value of what one can learn from insider trading with commonly used measures of value such as price-earnings ratio, book-to-market ratio, and dividend yield.

Who Follows the Prophets? Analysts' Stock Recommendations and the Trading Response of Large and Small Traders

Who Follows the Prophets? Analysts' Stock Recommendations and the Trading Response of Large and Small Traders
Author: Wen He
Publisher:
Total Pages: 38
Release: 2005
Genre:
ISBN:

Consistent with the industry practice of linking analyst compensation to their reputation, we find that large traders primarily follow the advice of star analysts and ignore the recommendations of non-star analysts. They buy (sell) stocks for which star analysts revise their recommendations upwards (downwards). Small traders are also privy to analyst advice - they respond quickly to recommendation upgrades by buying the upgraded stocks. However, they do not sell stocks that are downgraded. Small traders, thus, seem unwilling or unable to respond to unfavorable firm-specific news even when the investment implications of the news are reasonably obvious. Small traders are also less discriminating between star and non-star analysts. Our findings not only help understand the clientele of analysts' stock recommendations but also contribute to the literature that focuses on the response of small investors to firm-specific information events.