This study examines whether short-sellers and financial analysts develop complementary information about future earnings and returns and assesses whether investors can improve predictions made by each of these intermediaries using information provided by the other. The first main result is that the relative short interest ratio (shares sold short divided by total shares outstanding) contains information that is useful for predicting future earnings, beyond (i.e., incremental to) the information in analyst forecasts. I also find that analysts do not fully incorporate short interest information into their forecasts and demonstrate that analyst forecasts can be improved (i.e., can be made to be less biased and more accurate) by adjusting for short interest information. The second main result is that analyst forecast revisions contain information that is useful for predicting future abnormal returns, beyond the information in the relative short interest ratio. I demonstrate that portfolios of stocks formed based on consistent signals from short-sellers and analysts produce abnormal return spreads that are significantly larger than spreads produced by portfolios formed using signals from short-sellers alone. Collectively, the evidence suggests that short-sellers and analyst provide complementary information about future firm performance that is useful to investors.

This study examines whether short-sellers and financial analysts develop complementary information about future earnings and returns and assesses whether investors can improve predictions made by each of these intermediaries using information provided by the other. The first main result is that the relative short interest ratio (shares sold short divided by total shares outstanding) contains information that is useful for predicting future earnings, beyond (i.e., incremental to) the information in analyst forecasts. I also find that analysts do not fully incorporate short interest information into their forecasts and demonstrate that analyst forecasts can be improved (i.e., can be made to be less biased and more accurate) by adjusting for short interest information. The second main result is that analyst forecast revisions contain information that is useful for predicting future abnormal returns, beyond the information in the relative short interest ratio. I demonstrate that portfolios of stocks formed based on consistent signals from short-sellers and analysts produce abnormal return spreads that are significantly larger than spreads produced by portfolios formed using signals from short-sellers alone. Collectively, the evidence suggests that short-sellers and analyst provide complementary information about future firm performance that is useful to investors.

Syfte: Syftet med den här uppsatsen är att undersöka om blankade bolag har lägre grad av earnings quality än icke-blankade bolag. Metod: Kvantitativ metod, t-test för två populationer som antar olika varianser. Resultat och slutsats: Resultatet i den här studien visar att blankade bolag inte har lägre grad av earnings quality än icke-blankade bolag. Resultatet visar även att icke-blankade bolag har lägre grad av earnings quality än blankade bolag. Därför kan jag inte uttala mig om huruvida blankare använder earnings quality vid tagandet av blankningspositioner / Purpose: The purpose of this essay is to examine if shorted companies have poorer earnings quality than non-shorted companies Method: Quantitative analysis, t-test for two-sample assuming unequal variances Result and conclusion: The results of this study show that shorted companies do not have poorer earnings quality than non-shorted companies. The results also indicate that non-shorted companies have poorer earnings quality than shorted companies. Thus, I cannot comment on whether short sellers are using information about earnings quality when taking short positions

Ce travail doctoral étudie l’effet « retour » de l’information financière liée aux prix des actions sur les décisions des dirigeants d’entreprise. Plus précisément, j'étudie si et comment les gestionnaires apprennent effectivement les nouvelles informations contenues dans les prix des actions pour guider leurs décisions d'entreprise. Ma thèse de doctorat est composée de trois essais, chacun abordant un aspect différent de ce même sujet. Le premier essai étudie le lien entre l'efficacité informationnelle du marché d'actions et le niveau d’efficacité économique réelle de l'entreprise. Dans le premier essai, je constate que lorsque les prix de l'action agrègent une plus quantité d'informations utile plus grande, les décisions des entreprises prises par les gestionnaires devraient être encore plus optimales efficaces. Le deuxième essai étudie si les gestionnaires cherchent à apprendre les informations utilisées par les vendeurs à découvert. L’étude des prix des actions en présence de vendeurs à découvert est-il utile pour les décisions de l'entreprise ? Dans le deuxième essai, j'ai surmonté les difficultés empiriques en exploitant une caractéristique institutionnelle unique sur le marché des actions de Hong Kong. Je constate que les gestionnaires des entreprises « non-shortable » peuvent tirer profit des informations des vendeurs à découvert sur les conditions économiques sectorielles par l'intermédiaire des prix des actions d'autres entreprises « shortable » dans la même industrie et les utilisent dans leurs décisions d'entreprise. Le troisième essai étudie les effets réels de la négociation d'options à long terme. Dans le troisième essai, je constate que l’introduction d’une catégorie spécifique d'options à long terme stimule la production d'informations privées à long terme et donc entraîne une augmentation de l'informativité des prix sur les fondamentaux à long terme des entreprises. Par conséquent, les dirigeants peuvent extraire davantage d'informations du prix de l’action pour guider leurs décisions d'investissement à long terme. / In my doctoral thesis, I investigate the information feedback from stock prices to managers’ decisions. More specifically, I study whether and how managers learn new information from stock prices to guide their corporate decisions. My doctoral thesis includes three essays focusing on this topic. The first essay studies the relationship between stock market informational efficiency and real economy efficiency at firm-level. In the first essay, I find that when stock prices reflect greater amount of information that managers care about, corporate decisions made by managers become more efficient. The second essay studies whether managers seek to learn short sellers’ information from stock prices and use it in corporate decisions. In the second essay, I overcome the empirical difficulties by exploiting a unique institutional feature in Hong Kong stock market that only stocks included in an official list are allowed for short sales. I find that that non-shortable firms’ managers can learn short sellers’ information on external conditions from shortable peers’ stock prices and use it in their corporate decisions. The third essay studies the real effects of long-term option trading. I find that long-term option trading stimulates the production of long-term information, which managers can use to guide their long-term investment decisions.