Stock market effects of corporate malpractices and misconduct: Evidence from the short-seller Hindenburg

Bruno Albuquerque, António Miguel Martins and Nuno Moutinho

Finance Research Letters, 2025, vol. 72, issue C

Abstract: This study used event study methodology to examine the impact Hindenburg Research short-seller reports on targeted firms. The results show negative abnormal returns in firms when those reports reveal bad news about malpractices and misconduct. Our results show a higher negative stock market reaction to the Hindenburg reports when target firms are small, have higher leverage, higher Tobin's Q, and corporate malpractice involves financial fraud. Our findings evidence that adverse information disclosed in the Hindenburg report led to a “torpedo effect”, resulted in sharp, immediate, and persistent share price drops.

Keywords: Short-selling; Malpractices and misconduct; Financial market analysis; Event study; Abnormal returns (search for similar items in EconPapers)
JEL-codes: G12 G14 (search for similar items in EconPapers)
Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S1544612324015241
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:72:y:2025:i:c:s1544612324015241

DOI: 10.1016/j.frl.2024.106495

Access Statistics for this article

Finance Research Letters is currently edited by R. Gençay

More articles in Finance Research Letters from Elsevier
Bibliographic data for series maintained by Catherine Liu ().