Professor Brian L. Connelly, Raymond J. Harbert College of Business, Auburn University

Agency theory describes the relationship between agents and principals, but there are some principals who profit from downward stock price movement. These are “short sellers”, and they are hostile in the sense that they temporarily own shares of the firm, but are obligated to return the shares at a set price, so their value is maximised when firm value is minimised. Short-selling has increased considerably among publicly traded North American firms in recent years, making them an important component of the corporate governance landscape. Building on threat rigidity theory, we develop arguments about how managerial agents respond to short-sellers. We theorise that when firms have a high level of short interest shareholdings, managers will adopt a defensive stance by undertaking a smaller number of growth-oriented competitive actions and a larger number of consolidation initiatives. We then invoke the awareness, motivation, capability (AMC) perspective to help uncover scenarios where managers might be less likely to respond to the threat of short sellers. Specifically, we find that managers are less reactionary when (1) analysts are bullish on the firm, (2) CEOs are financially incented for growth and (3) the firm has ample financial slack.

Speaker bio

Professor Brian L. Connelly is Luck Eminent Scholar at Habert College of Business Auburn University. His research explores how corporate governance structures, such as shareholders and boards, affect competition and strategic outcomes. Some of the key theoretical mechanisms that underlie his work include signalling theory, social network theory, and tournament theory. Professor Connelly is Associate Editor at the Academy of Management Journal and has published in journals such as the Academy of Management Journal, Strategic Management Journal, Organization Science, and the Journal of Management.

This seminar is organised in association with the Cambridge Corporate Governance Network (CCGN).

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Room W4.05 (Cambridge Judge Business School)
Trumpington St
Cambridge
CB2 1AG

Clock icon Date & time

Date: 17 February 2017
Start Time: 13:00
End Time: 14:30

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Open to: Members of the University of Cambridge

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Event location


Trumpington St
Cambridge
CB2 1AG

Event timings

Date: 17 February 2017
Start Time: 13:00
End Time: 14:30