Short Selling and Performance on Corporate Social Responsibility: Evidence from a Natural Experiment

Vanya Rusinova, Georg Wernicke

Research output: Chapter in Book/Report/Conference proceedingArticle in proceedingsResearchpeer-review


In this paper, we test for a causal relationship between an increase in the threat of a firm's stocks being shorted and firm performance on Corporate Social Responsibility (CSR). Building upon the risk-management perspective of CSR, we argue that when faced with an increase in the threat of short-sellers targeting the firm, managers counteract the potential pressure on the firm’s stock price by increasing the firm’s CSR performance. To establish causality, we use the exogenous variation in the cost of short-selling induced by the Pilot Program under Regulation SHO of 2004 which decreased the costs of short-selling for a randomly selected subset of Russell 3000 firms. Results from the difference-in-difference (DiD) analysis support our hypothesis. We then further theorize that the temporal orientation of the firm’s institutional owners, the level of financing constraints and the firm’s own time horizon moderate the relationship between the threat of short selling and firm performance on CSR.
Original languageEnglish
Title of host publicationProceedings of the Seventy-ninth Annual Meeting of the Academy of Management
EditorsGuclu Atinc
Number of pages6
Place of PublicationBriar Cliff Manor, NY
PublisherAcademy of Management
Publication date2019
Article number5
Publication statusPublished - 2019
EventThe Academy of Management Annual Meeting 2019: Understanding the Inclusive Organization - Boston, United States
Duration: 9 Aug 201913 Aug 2019
Conference number: 79


ConferenceThe Academy of Management Annual Meeting 2019
Country/TerritoryUnited States
Internet address
SeriesAcademy of Management Proceedings

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