Active Short Selling By Hedge Funds

Active Short Selling By Hedge Funds

Ian Appel, Vyacheslav Fos

Series number :

Serial Number: 

Date posted :

June 28 2019

Last revised :

July 20 2020
SSRN Share


  • Activist Hedge Funds • 
  • Short Selling • 
  • Strategic Communication

We examine the role of strategic communication in public short selling campaigns by hedge funds. Such campaigns are associated with abnormal returns for targets of approximately -7\% as well as changes in the behavior of stakeholders (e.g., other short sellers). The effects are driven by campaigns that feature specific allegations rather than general claims of overvaluation.

Campaigns are primarily undertaken by activist hedge funds, particularly those that have more experience or employ hostile tactics. Overall, our findings are consistent with models of strategic communication in which investor reputation and the credibility of allegations facilitates the flow of negative information into prices.


Real name:
Ian Appel
Boston College