Date: 25th June, 2019

Time: 10:00 a.m.

Venue: Room 702, The Administration Building, Zhejiang University

【Speaker Introduction】：Yong Yu, the professor of McCombs Business School of Texas University at Austin. He graduated from Tsinghua University in 1999 with a bachelor's degree in international accounting, and received a doctorate in accounting from Pennsylvania State University in 2006.

【Seminar Abstract】： This study examines whether short-sellers mitigate or exacerbate analysts’ self-selection in coverage (i.e., covering (forgoing) firms for which they have favorable (unfavorable) information). We measure short-selling potential using lendable shares, and gauge an analyst’s self-selection in coverage by the difference between the analyst’s initial ratings for her newly-added firms and ratings for her previously-covered firms (McNichols and O’Brien 1997). We find that short-selling potential is negatively related to analysts’ self-selection in coverage and this negative relation is concentrated in firms where higher short-selling potential triggers more short-sales. Further instrumental variable tests and analyses of a shock to short-selling potential provide evidence that this negative relation is causal. Additional tests reveal that our results cannot be attributed to short-sellers conveying negative information to analysts or disciplining analysts’ ratings. Finally, we show that the predictive power of analyst coverage for subsequent stock returns decreases with short-selling potential. Overall, our results suggest that short-sellers mitigate analysts’ self-selection in coverage by increasing the trading benefit of analysts’ bad news disclosures (Hayes 1998).