TY - JOUR
T1 - Understanding short selling activity in the hospitality industry
AU - Kot, Hung
AU - Chen, Ming-Hsiang
AU - Cheung, Adrian Wai Kong
AU - Huang, Haiyu
PY - 2019/9
Y1 - 2019/9
N2 - The objective of the study is to examine short selling activity in the hospitality industry. Using short interest from 1996 to 2015 in airline, gambling, hotel and restaurant firms, we analyze their demand and supply factors for short selling. Results from multivariate regression reveal five interesting findings. First, short sellers short their hospitality stocks because of overvaluation, arbitrage and hedging from stock options and convertible bonds. Second, short sellers follow momentum strategies and short more stocks if there is a large divergence in investors’ opinions. Third, for the supply side, the level of institutional ownership has a positive effect on short selling, but its concentration has a negative effect. Fourth, the test results of the sub-periods and individual industries show that the supply side is quite similar but there is a large variation in demand-side variables. Finally, heavily shorted hospitality stocks have poor future one-year performance.
AB - The objective of the study is to examine short selling activity in the hospitality industry. Using short interest from 1996 to 2015 in airline, gambling, hotel and restaurant firms, we analyze their demand and supply factors for short selling. Results from multivariate regression reveal five interesting findings. First, short sellers short their hospitality stocks because of overvaluation, arbitrage and hedging from stock options and convertible bonds. Second, short sellers follow momentum strategies and short more stocks if there is a large divergence in investors’ opinions. Third, for the supply side, the level of institutional ownership has a positive effect on short selling, but its concentration has a negative effect. Fourth, the test results of the sub-periods and individual industries show that the supply side is quite similar but there is a large variation in demand-side variables. Finally, heavily shorted hospitality stocks have poor future one-year performance.
KW - Demand
KW - Future stock returns
KW - Hospitality industry
KW - Short selling
KW - Supply
UR - http://www.scopus.com/inward/record.url?scp=85064940445&partnerID=8YFLogxK
U2 - 10.1016/j.ijhm.2019.03.029
DO - 10.1016/j.ijhm.2019.03.029
M3 - Article
VL - 82
SP - 136
EP - 148
JO - International Journal of Hospitality Management
JF - International Journal of Hospitality Management
SN - 0278-4319
ER -