Introduction:*

We investigate the effect of short-selling pressure on corporate accountant turnover. Based on a novel dataset of accounting managers working for Russell 3000 firms, we show that accountants of firms facing greater short-selling pressure are more likely to resign. These results are robust to the use of an instrumental variable and hold in two natural experiments in the United States (the Securities and Exchange Commission Regulation SHO pilot program) and China (the 2011 short-selling deregulation). Our findings are driven by a significant decrease in accountants’ work satisfaction in terms of work-life balance, culture and value, career opportunities, compensation and benefits, and senior management, suggesting that short-selling pressure increases corporate accountants’ disutility. We further find that accountant resignations due to short-selling pressure negatively affect focal firms, as they experience a net loss in the number of their corporate accountants, which translates into more material weaknesses in internal controls over financial reporting in the future.

*Co-authored with Y. Lin (NUS Business School) and J. Yao (Yinan University)

General information:

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