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Short selling and future cash flow predictability of capital investment: Evidence from Australia
Citation
Jiang, H and Jia, J, Short selling and future cash flow predictability of capital investment: Evidence from Australia, Journal of Contemporary Accounting and Economics, 17 pp. 1-17. ISSN 1815-5669 (2020) [Refereed Article]
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Copyright Statement
Copyright 2020 Elsevier Ltd. All rights reserved
DOI: doi:10.1016/j.jcae.2020.100224
Abstract
This study investigates whether short selling, as a market mechanism, has a disciplining function for firms’ investment efficiency, measured through the association between capital investment and future cash flows. Using a sample of large Australian listed firms, we find that short-selling activities improve the positive relationship between capital investment and future cash flow and that this effect is mainly driven by firms with a risk management committee (RMC). Additional analyses show that the disciplining function of short selling for firms’ investment efficiency varies with (i) the level of firms’ financial constraints, (ii) firms’ life cycle or (iii) CEO share incentives. The main results are robust to a batch of endogeneity tests to address the potential self-selection bias and the concern about reverse causality.
Item Details
Item Type: | Refereed Article |
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Keywords: | short selling, investment efficiency, future cash flows, risk management, financial constraints, life cycle |
Research Division: | Commerce, Management, Tourism and Services |
Research Group: | Accounting, auditing and accountability |
Research Field: | Financial accounting |
Objective Division: | Commercial Services and Tourism |
Objective Group: | Financial services |
Objective Field: | Finance services |
UTAS Author: | Jia, J (Dr Jing Jia) |
ID Code: | 141495 |
Year Published: | 2020 |
Deposited By: | TSBE |
Deposited On: | 2020-10-26 |
Last Modified: | 2021-04-22 |
Downloads: | 2 View Download Statistics |
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