ABSTRACT:
This report analyses the effect of the company disclosed information on the short selling volume in Hong Kong stock market. Using the data at 28 April 2006 on the short sale volume in individual stocks, we find that the financial ratios namely quick ratio, price-to-book ratio, time interest ratios, inventory turnover and earnings per share have an inversely proportion to the number of short selling in the market. Meanwhile, the ratios including ROA and price-to-sales ratio have a positive relation to the number of short selling. Short sellers may also refer to factors like changing in directorship and company news in making their investment decision.
Keywords: Short Selling
Table of Content
1. Introduction 3
2. Econometric Model 5
3. Data 10
4. Estimation Result 12
5. Conclusion 15
6. References 16
7. Appendices 17
1. Introduction
Short selling is one of the investing techniques being used in the stock market. Since it involves the selling of a stock that the seller does not own, sooner or later short sellers must cover their short by buying back the same number of shares at the market price and returning to their broker. Short sellers would like to see the price of the stock drops because they can buy it back at the lower price and make a profit on the difference.
When it comes to investing, analyzing financial statement information is one of the important eleme ...