[{"data":1,"prerenderedAt":-1},["ShallowReactive",2],{"detail-sidebar-cat-0-en-105":3,"doc-seo-167295-105":59,"doc-detail-167295-en":130},{"code":4,"msg":5,"data":6},0,"success",[7,13,18,23,28,33,38,43,48,51,55],{"id":8,"doc_module":4,"doc_module_name":9,"category_name":10,"show_sort_weight":11,"slug":12},1,"Document","Story & Novel",90,"story-novel",{"id":14,"doc_module":4,"doc_module_name":9,"category_name":15,"show_sort_weight":16,"slug":17},2,"Literature",80,"literature",{"id":19,"doc_module":4,"doc_module_name":9,"category_name":20,"show_sort_weight":21,"slug":22},4,"Exam",70,"exam",{"id":24,"doc_module":4,"doc_module_name":9,"category_name":25,"show_sort_weight":26,"slug":27},5,"Comic",60,"comic",{"id":29,"doc_module":4,"doc_module_name":9,"category_name":30,"show_sort_weight":31,"slug":32},6,"Technology",50,"technology",{"id":34,"doc_module":4,"doc_module_name":9,"category_name":35,"show_sort_weight":36,"slug":37},7,"Healthcare",40,"healthcare",{"id":39,"doc_module":4,"doc_module_name":9,"category_name":40,"show_sort_weight":41,"slug":42},8,"Research & Report",30,"research-report",{"id":44,"doc_module":4,"doc_module_name":9,"category_name":45,"show_sort_weight":46,"slug":47},9,"Religion & Spirituality",20,"religion-spirituality",{"id":46,"doc_module":4,"doc_module_name":9,"category_name":49,"show_sort_weight":46,"slug":50},"World Cup","world-cup",{"id":52,"doc_module":4,"doc_module_name":9,"category_name":53,"show_sort_weight":52,"slug":54},10,"Lifestyle","lifestyle",{"id":56,"doc_module":4,"doc_module_name":9,"category_name":57,"show_sort_weight":24,"slug":58},19,"General","general",{"code":4,"msg":60,"data":61},"ok",{"site_id":62,"language":63,"slug":64,"title":65,"keywords":66,"description":67,"schema_data":68,"social_meta":123,"head_meta":125,"extra_data":127,"updated_unix":129},105,"en","earnings-quality-and-short-selling-evidence-from-real-earnings-management-in-the-united-states","Earnings quality and short selling - Evidence from real earnings management in the United States","","The study investigates whether short sellers exploit the overvaluation of firms that use real earnings management (REM) to increase earnings. Evidence shows that firms with more REM exhibit higher subsequent short interest, with the positive REM–short interest relation stronger when accrual-based earnings management costs are high. This occurs under low accounting flexibility or greater auditor scrutiny. The study also finds short sellers may respond to REM more than to other overvaluation signals, with results robust to propensity score matching.",{"@graph":69,"@context":122},[70,84,105],{"@type":71,"itemListElement":72},"BreadcrumbList",[73,77,79,82],{"item":74,"name":75,"@type":76,"position":8},"https://docshare.wps.com","Home","ListItem",{"item":78,"name":9,"@type":76,"position":14},"https://docshare.wps.com/document/",{"item":80,"name":40,"@type":76,"position":81},"https://docshare.wps.com/document/research-report/",3,{"item":83,"name":65,"@type":76,"position":19},"https://docshare.wps.com/document/earnings-quality-and-short-selling-evidence-from-real-earnings-management-in-the-united-states/167295/",{"url":83,"name":65,"@type":85,"image":86,"author":91,"headline":65,"publisher":94,"fileFormat":97,"inLanguage":63,"description":67,"dateModified":98,"datePublished":99,"encodingFormat":97,"isAccessibleForFree":100,"interactionStatistic":101},"DigitalDocument",{"url":87,"@type":88,"width":89,"height":90},"https://docshare.wps.com/thumbnails/earnings-quality-and-short-selling-evidence-from-real-earnings-management-in-the-united-states/167295.png","ImageObject",300,407,{"name":92,"@type":93},"Asher","Person",{"url":74,"name":95,"@type":96},"DocShare","Organization","application/pdf","2026-09-18","2026-08-31",true,{"@type":102,"interactionType":103,"userInteractionCount":19},"InteractionCounter",{"@type":104},"ViewAction",{"@type":106,"mainEntity":107},"FAQPage",[108,114,118],{"name":109,"@type":110,"acceptedAnswer":111},"What does the study examine about short sellers and earnings management?","Question",{"text":112,"@type":113},"It examines whether short sellers exploit overvaluation by targeting firms that employ real earnings management (REM). It also compares how REM relates to short interest versus other overvaluation signals.","Answer",{"name":115,"@type":110,"acceptedAnswer":116},"How does real earnings management relate to subsequent short interest?",{"text":117,"@type":113},"Firms with more REM have higher subsequent short interest. The relation is more pronounced when accrual-based earnings management is more costly, such as with low accounting flexibility or when scrutiny from a high-quality auditor is greater.",{"name":119,"@type":110,"acceptedAnswer":120},"Does the evidence hold under different research methods?",{"text":121,"@type":113},"The study reports that its inferences are robust when using propensity score matching to address observable differences between firms.","https://schema.org",{"og:url":83,"og:type":124,"og:title":65,"og:site_name":95,"og:description":67},"article",{"robots":126,"canonical":83},"index,follow",{"doc_id":128,"site_id":62},167295,1788211600,{"code":4,"msg":5,"data":131},{"doc_id":128,"user_id":132,"nickname":92,"user_avatar":133,"doc_module":4,"category_id":39,"category_name":40,"doc_title":65,"doc_description":67,"doc_content":134,"file_id":135,"file_url":136,"file_type":137,"file_size":138,"view_count":19,"is_deleted":4,"is_public":8,"is_downloadable":8,"audit_status":8,"page_count":139,"language":140,"language_code":63,"site_id":62,"html_lang":63,"table_of_contents":141,"faqs":142,"seo_title":143,"seo_description":67,"update_tm":129,"read_time":144},687197207639,"https://ap-avatar.wpscdn.com/davatar_a8503ba1806abce46bf441b54a3ca4cd","DOI: 10.1111/jbfa.12264  \nEarnings quality and short selling: Evidence from real earnings management in the United States  \nKoEun Park  \nCollege of Management, University of Massachusetts Boston  \nCorrespondence  \nKoEun Park, Department ofAccounting and Finance, College of Management, University of Massachusetts Boston,100Morrissey Blvd., Boston, MA02125, United States. [Email: KoEun.Park@umb.edu](Email: KoEun.Park@umb.edu)  \nAbstract  \nPrior research provides evidence consistent with managers using real earnings management (REM) to increase earnings. This study examines whether short sellers exploit the overvaluation of firms employing REM. I find that firms with more REM have higher subsequent short interest. The positive relation between REM and short interest is more pronounced in settings where the costs associated with accrual-based earnings management are high, such as when a firm has low accounting flexibility or faces greater scrutiny from a high quality auditor. I also find some evidence that short sellers respond toREM more than to otherfundamental signals offirm overvaluation. My inferences are robust to the use of propensity score matching. Collectively, my evidence suggests that short sellers not only trade on REM information, but they also trade as if they understand the substitutive nature of alternative earnings management methods. This study provides additional insight into the important role that short sellers play in monitoring managerial operating decisions and overall earnings quality.  \nKEYWORDS  \ncorporate governance, earnings quality, real earnings management, short selling  \n1  INTRODUCTION  \nShort sellers have been viewed in the academic literature as well-informed and sophisticated investors(e.g., Diamond& Verrecchia,1987).1 In particular, several studies provide evidence that short sellers identify overvaluedfirms that have engaged in accruals management.2 Yet managers also engage in real earnings management (REM), a practice that has become prevalent and that brings more severe consequences than accrual-based earnings management (e.g., Cohen & Zarowin, 2010; Cohen, Dey, & Lys, 2008). Since REM ʼs negative implications for future performance tend to be incorporated into stock prices with a delay,3 short sellers likely have incentives to target firms engaging in REM. Despite  \n1 Although the media and some regulators claim that short selling causes an unwarranted downward spiral in stock price (e.g., Karpoff & Lou, 2010; Drake, Myers, Myers, & Stuart, 2015), these claims are largely based on anecdotal evidence.  \n2 See, for example, Desai et al. (2006), Karpoff and Lou (2010), and Hirshleifer et al. (2011).  \n3 See, for example, Li (2012).  \nJ Bus Fin Acc. 2017;1–27.  \nwi[leyonlinelibrary.com/journal/jbfa](leyonlinelibrary.com/journal/jbfa)  \n􀀂c 2017 John Wiley & Sons Ltd  \n1  \nthe substitutive relation between accrual-based earnings management and REM (e.g., Zang, 2012), we know very little aboutwhether short sellers also monitor REMor ignore it, thereby potentially encouraging managers to switch toREM. My goal is to provide evidence of the level of sophistication in short sellers ʼ response to managers ʼ abnormal operating decisions. More specifically, I examine whether and how short interest is related to a firm ʼs REM as compared to other fundamental signals identified by prior studies. Doing so provides a more complete picture of short sellers ʼ monitoring of the overall quality of corporate earnings.  \nShort selling refers to the sale of a stock by an investor who does not own it but borrows it from other investors in anticipation of profiting from a price decline. Given the high costs associated with short positions, short sellers have strong incentives to identify overpriced firms, thereby facilitating the incorporation of unfavorable information into market prices. A number of studies suggest that short sellers are sophisticated investors by providing evidence that their positions predict future returns ","cbCaitZ52bVUUkrA","https://ap.wps.com/l/cbCaitZ52bVUUkrA","pdf",262194,27,"English","# Introduction\n## Research focus: short sellers and real earnings management\n## Background: short selling and earnings quality\n## Earnings management: accrual-based vs real earnings management","[{\"question\":\"What does the study examine about short sellers and earnings management?\",\"answer\":\"It examines whether short sellers exploit overvaluation by targeting firms that employ real earnings management (REM). It also compares how REM relates to short interest versus other overvaluation signals.\"},{\"question\":\"How does real earnings management relate to subsequent short interest?\",\"answer\":\"Firms with more REM have higher subsequent short interest. The relation is more pronounced when accrual-based earnings management is more costly, such as with low accounting flexibility or when scrutiny from a high-quality auditor is greater.\"},{\"question\":\"Does the evidence hold under different research methods?\",\"answer\":\"The study reports that its inferences are robust when using propensity score matching to address observable differences between firms.\"}]","Earnings quality and short selling - Evidence from real earnings management in the United States | PDF",68]