Henry, Tyler R.; Kisgen, Darren J.; Wu, Juan - In: Journal of Financial Intermediation 24 (2015) 1, pp. 89-111
We examine whether short sellers identify firms that have significant changes in default likelihoods and credit rating downgrades. In the month before a rating downgrade, equity short interest is 40% higher than one year prior. Short sellers predict changes in default probabilities that lead to...
