ACADEMIC EMPLOYMENT

      2008-                 Assistant Professor of Finance, Terry College of Business, University of Georgia

      2007-2008          Post-Doctoral Research Associate, Mays Business School, Texas A&M University

EDUCATION

      Ph.D.                 Finance (2007), Mays Business School, Texas A&M University

RESEARCH PAPERS

      How Are Shorts Informed: Evidence from Market Anomalies (with Andrew Zhang)

Short sellers are generally regarded as informed traders, but the nature of their information is not well understood. This study investigates short sellers' informational advantage by relating short interest to a broad range of well-known financial anomalies, including momentum, accrual, asset growth, net equity issues, financial distress, profitability, and earnings surprise. We find that short sellers target (avoid) stocks whose anomaly variables predict lower (higher) future returns. Further, anomaly variables and short interest convey similar information about firm future fundamentals. Strikingly, once these anomaly variables are controlled for, short interest no longer predicts future returns. Together the evidence suggests that short sellers' informational advantage primarily comes from their ability to trade on public information contained in financial anomaly variables.

      Do Equity Short Sellers Anticipate Bond Rating Downgrades? (with Tyler R. Henry and Darren J. Kisgen )

Short selling increases prior to credit rating downgrades. In the month preceding a credit rating downgrade, short interest is 40% higher than one year prior, and short selling returns to normal levels following a downgrade. Short interest is higher for downgrades with higher negative equity announcement returns and for more severe downgrades (e.g., to speculative grade). The evidence indicates informed trading in pre-downgrade short selling, but we find little evidence of information leakage. Abnormal returns following downgrades also diminish when short selling is higher prior to the downgrade, indicating short selling aids in price discovery.

      Short Selling and the Price Discovery Process (with Ekkehart Boehmer)

We show that stock prices are more accurate along several dimensions when short sellers are more active. First, in a large panel of NYSE-listed stocks, high-frequency informational efficiency of prices improves with greater daily shorting flow. Second, at monthly and annual horizons, more shorting flow accelerates the incorporation of public information into prices. Third, greater shorting flow reduces post-earnings announcement drift for negative earnings surprises. Fourth, we demonstrate that short sellers change their trading around extreme return events in a way that aids price discovery and reduces divergence from fundamental values. These results are robust to various econometric methodologies and model specifications. Together with earlier evidence that short sellers tend to be informed traders, our results highlight the important role that their trading activity plays in the price discovery process.

      Order flow and prices (with Ekkehart Boehmer)

We provide new evidence on the relation between order flow and prices, an issue that is central to asset pricing and market microstructure. We examine proprietary data on a broad panel of NYSE-listed stocks that reveal daily order imbalances by institutions, individuals, and market makers. We can further differentiate regular institutional trades from institutional program trades. Our results indicate that order imbalances from different trader types play distinctly different roles in price formation. Institutions and individuals are contrarians with respect to previous-day returns, but differ in the effect their order imbalances have on contemporaneous returns. Institutional imbalances are positively related to contemporaneous returns, and we provide cross-sectional evidence that this relation is likely to be the result of firm-specific information institutions have. Individuals, specialists, and other market makers appear to provide liquidity to these actively trading institutions. Our results also suggest a special role for institutional program trades, which tend to be uninformed and provide liquidity to more aggressively trading institutions. Finally, institutional non-program imbalances (information which is not available to market participants) have predictive power for next-day returns.

      Industry News, Firm News, and Information Transfers From Management Earnings Forecasts (with David Koo

      and Eric Yeung)

Using textual analysis, we identify the economic factors underlying earnings news in management forecasts and test the prediction that peer firms' price reactions to the earnings news hinge on whether the earnings news is attributed to industry-wide or firm-specific events. We find that news attributed to industry-wide trends or firm structural changes leads to positive information transfers but news attributed to firm competitive moves triggers negative information transfers. In addition, information transfers occur only when management disclosures are perceived to be more credible. We also find supportive evidence that earnings news and related attributions predict post-forecast period fundamentals.

PRESENTATIONS AT PROFESSIONAL MEETINGS

      • 2009, All Georgia Finance Conference         

            "Short selling and the informational efficiency of prices"

      • 2007 American Finance Association , Chicago

             "Order flow and prices"

• 2007 Financial Management Association Special PhD Student Paper Presentation Sessions, Orlando

 "Short selling and the informational efficiency of prices"

      • 2006 Workshop on the Microstructure of Foreign Exchange and Equity Markets, Ottawa, Canada

            "Order flow and prices"

COURSES TAUGHT

• Corporate Finance Theory (Undergrad), University of Georgia

• Boot Camp for Incoming Finance PhD Students (PhD) , Managerial Finance (Undergrad) , Texas A&M University

PROFESSIONAL ACTIVITIES

• Discussant at NBER Microstructure meeting, May 2008

• Member of Program Committee (Investment Track), 2008 Midwest Finance Association

• Ad Hoc Referee, Financial Management, Journal of Empirical Finance, Journal of Finance, Review of Financial Economic, Review of Financial Studies