Short Selling and Firm Performance on Corporate Social Responsibility: Evidence from a Natural Experiment

Past event — 20 February 2019

Kühne Logistics University
Grosser Grasbrook 17, 20457 Hamburg, Room Faculty Lounge

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Prof. Dr. Georg Wernicke

Assistant Professor in Strategy

HEC Paris, France


In this paper, we test for a causal relationship between an increase in the threat of short selling and firm performance on Corporate Social Responsibility (CSR). Building upon the risk-management perspective of CSR, we argue that when faced with an increase in the threat of short selling, firms improve their performance on CSR. To establish causality, we use the exogenous variation in the cost of short selling induced by the Regulation SHO of 2004 which decreased the costs of short selling for a randomly selected subset of Russell 3000 firms. Results from the difference-in-difference analysis support our hypothesis. We then further theorize that the level of financing constraints, the investment horizon of the firm’s institutional owners and the composition CEO compensation moderate this relationship.


Georg Wernicke is an Assistant Professor in Strategy at HEC Paris since March 2018. Before, he has been a faculty member at Copenhagen Business School. His general research focus is on topics in, and the intersection of, corporate governance and corporate social responsibility oftentimes paying special attention the role of the news media. Georg holds a doctoral degree from the University of Mannheim. For his thesis, he received the Oxford University Centre for Corporate Reputation Dissertation award. His research has been published in journals such as Organization Science and the Strategic Management Journal. Georg currently serves as Representative-at-Large in the SMS Strategic Leadership and Governance IG.

More info about Prof. Georg Wernicke


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Birgit Kappert

Program Manager