Liu Hong, Fossett Distinguished Professor of Finance and Director of the Master's in Finance Program at the Washington University in St. Louis, will give a lecture with Xi Dong, Siyi Shen, and YajunWang entitled “Negative Information Revelation: Informed Sales Meet Short Sales t” at 10:00 a.m. on March 1st.
The lecture will be hosted by the School of Finance, Renmin University of China (RUC) in Room 515A in the Mingde Main Building. Liu Xin, Associate Professor of the School of Finance, RUC, will preside over the lecture.
Abstract: Existing literature concludes that binding short-sale constraints limit the revelation of negative information but overlooks negative information in informed sales. Our study, based on data on informed institutional and illegal insider sales, reveals that informed sales can significantly weaken the impact of short-sale constraints. We provide evidence of a lead-lag information transmission mechanism, with informed sales unidirectionally leading short-sales, other institutional sales, and the stringency of short-sale constraints. These findings are supported by a rational expectations equilibrium model. Our analysis underscores the undervalued role of informed sales in understanding overpricing and market bubbles.
Introduction: Liu Hong is Fossett Distinguished Professor of Finance and Director of the Master's in Finance Program at the Washington University in St. Louis. He received his Ph.D. from the University of Pennsylvania in 1998. His research focuses on optimal consumption and investment with frictions, asset pricing, market microstructure. His research results have been published on journals including Journal of Finance, Review of Financial Studies, Journal of Economic Theory, Journal of Financial and Quantitative Analysis, Management Science and so on. He has received honors such as Marcile & James Reid Chair, Washington University, Olin School of Business in 2004, Prize in Investment Research, Geewax, Terker & Company in 1998, and Lawrence Robbins Prize in Economics, University of Pennsylvania in 1995.
