Abstract: Gande and Lewis (2009) show class-action lawsuit filings are anticipated by investors. In this paper, we examine short-selling activity surrounding lawsuit filings and find that short activity surges in the days before the filing. However, short-selling activity remains significantly high until a few days after the filing. We also find some evidence that both pre- and post-filing short activity can be used to predict the outcome of the filing. In particular, we find that, after controlling for a variety of firm-specific factors, short activity during the filing period increases the likelihood that the lawsuit eventually generates money for the plaintiff.
Publication Year: 2014
Publication Date: 2014-09-01
Language: en
Type: article
Indexed In: ['crossref']
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Cited By Count: 23
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