ABSTRACT Although activist short sellers can play a crucial role in fraud detection, they have come under scrutiny following accusations of systematically disseminating false negative information. We develop a framework delineating the roles of campaign-specific private information quality and short-selling dynamics in shaping disclosure incentives. We predict that the act of disclosure combined with pre-disclosure stock lending dynamics is informative about the quality of an activist’s private information. We find that increased pre-disclosure shorting intensity is associated with more negative post-disclosure returns, adverse media coverage, and consequential campaign outcomes, including auditor turnover, accounting restatements, class-action lawsuits, and performance-related delistings. Furthermore, elevated short-selling costs and risks magnify the association between pre-disclosure shorting intensity and post-disclosure underperformance. Finally, we examine V-shaped reversals and short covering following activists’ disclosures and find no evidence of systematic manipulation. We conclude that activists disclosing fraud allegations under their own names are discouraged from engaging in “short-and-distort” schemes. Data Availability: Data are available from the sources cited in the text. JEL Classifications: G12; G14; G23; M41.

中文翻译：

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激进欺诈活动的幕后：私人信息质量、披露激励和股票借贷动态


摘要尽管激进的卖空者可以在欺诈检测中发挥至关重要的作用，但由于被指控系统性地传播虚假负面信息，他们受到了密切关注。我们开发了一个框架，描述了特定活动的私人信息质量和卖空动态在塑造披露激励方面的作用。我们预测，披露行为与预先披露的股票借贷动态相结合，可以提供有关激进分子私人信息质量的信息。我们发现，披露前做空强度的增加与更多的披露后负面回报、负面媒体报道以及随之而来的竞选结果相关，包括审计师更替、会计重述、集体诉讼和与业绩相关的退市。此外，卖空成本和风险的上升放大了披露前的做空强度与披露后表现不佳之间的关联。最后，我们检查了激进分子披露后的 V 形反转和空头回补，没有发现系统操纵的证据。我们的结论是，不鼓励以自己名义披露欺诈指控的活动人士参与“短期扭曲”计划。数据可用性：数据可从文中引用的来源获得。 JEL 分类：G12； G14； G23； M41。