Abstract
Purpose
The purpose of this paper is to examine the role of short sellers in foreign direct investment (FDI) decisions. Drawing on threat rigidity theory, the authors argue that short sellers pose a threat to chief executive officers (CEOs) by exerting downward pressure to target firms’ stock prices. That threat will evoke rigid managerial responses that hinder new FDI activities. The authors also posit that CEOs will be less reactive to short sellers’ threats when they are generalist CEOs who have extensive general work experience or when they serve as the board chair.
Design/methodology/approach
The authors collect data from S&P 1,500 firms, and the final sample consists of 717 firms and 6,930 firm-year observations from 1998 to 2016. The authors use an Arellano and Bond generalized method of moments static linear probability panel data model and an instrumental panel count data model to test the hypotheses.
Findings
The findings support the hypotheses and suggest that CEOs who are under more pressure from short sellers engage in fewer new FDI activities. The negative impact of short sellers on FDI decisions is less salient when CEOs have general work experience or are the chairperson of the board.
Originality/value
This study contributes to the international business research by stressing the need to consider the role of short sellers in firm internationalization decisions.
Subject
General Business, Management and Accounting,Business and International Management
Cited by
1 articles.
订阅此论文施引文献
订阅此论文施引文献,注册后可以免费订阅5篇论文的施引文献,订阅后可以查看论文全部施引文献