@inbook{b778442138ca4360b4b3b6c491002e06,
title = "Short selling and corporate tax avoidance",
abstract = "This study examines short selling as one external determinant of corporate tax avoidance. Prior research suggests that short sellers have information advantages over retail investors, and high short-interest levels are a bearish signal of targeted stock prices. As a result, when short-interest levels are high, managers have been shown to take actions to minimize the negative effect of high short interest on firms{\textquoteright} stock prices. Tax-avoidance activities may convey a signal of bad news (i.e., high stock price crash risk). We predict that, when short-interest levels are high, managers possess incentives to reduce firm tax avoidance in order to reduce the associated stock price crash risk. Consistent with this prediction, we find that short interest is negatively associated with subsequent tax-avoidance levels. This effect is incremental to other factors identified by prior research. We conclude that short selling significantly constrains corporate tax avoidance.",
keywords = "Book-tax differences, Effective tax rates, Short selling, Stock price crash risk, Tax avoidance, Tax shelters",
author = "Guo, {Savannah Yuanyuan} and Sabrina Chi and Cook, {Kirsten A.}",
note = "Publisher Copyright: {\textcopyright} 2019 by Emerald Publishing Limited All rights of reproduction in any form reserved.",
year = "2018",
doi = "10.1108/S1058-749720180000025001",
language = "English",
series = "Advances in Taxation",
publisher = "Emerald Group Publishing Ltd.",
pages = "1--28",
booktitle = "Advances in Taxation",
}