We empirically investigate how short selling affects product market performance via a managerial monitoring channel. Using both historical data and the Reg SHO, we find that higher short interest leads to lower market shares of large firms. Our Reg SHO results are also stronger in concentrated...

We empirically investigate how short selling affects product market performance. We find that higher short sales of stocks lead to declines in firms' market shares. The effects are stronger in larger firms, concentrated industries, and industries where firms compete in strategic substitutes....