News Release

Keep an Eye on Stock Short Sellers to Avoid Losing in Bond Investments Too, UC Davis Study Says

Savvy investors who follow short sellers to predict bearish news about a company’s stock — and sell their stocks in that company to avoid losses –  should keep an eye on the company’s bonds as well, a new UC Davis study suggests.

“Bond investors could avert significant losses by following the simple rule of selling bonds based on elevated or rising short interest, ” said Paul Griffin, professor at the UC Davis Graduate School of Management, who co-authored the study with Hyun Hong, assistant professor of accounting at the University of Memphis.

The findings are new in the academic literature, according to Griffin.

“Traditionally, traders and academics alike have focused on analyzing the positions of short sellers as an indication for investors to sell the stock, and therefore to avoid the loss from a further decline in the stock’s value,” Griffin writes in a working paper on the research, “Price Discovery in the Corporate Bond Market: The Informational Role of Short Interest.”

In their study, Griffin and Hong analyzed more than 9,000 bond observations, or sales and purchases of a bond in a given month, from 660 companies from 2005 to 2007. They discovered that bonds showed a similar pattern to short sales.

According to their research, the excess (risk-adjusted) returns on bonds decrease in the months immediately following a high or increasing “short” position. At any point, one can determine the total number of shares borrowed and sold short because brokers have
to report this to the exchanges. This number reflects the short interest position, Griffin said.

Selling short describes a strategy in which an investor borrows a stock, sells it in the market, waits for the market price to decline, and buys it back at a lower price than the one at which he sold it, returning the stock to the original owner while making a profit.

The researchers also found that regardless of whether earnings are up or down relative to analysts’ projections, bond prices fall around earnings announcements for abnormally high short-position stocks.

Griffin and Hong used readily available bond data that institutions use to track their own bond portfolios.

Media contact(s):

Commands

Twitter Feed

Loading tweets...
News Release

UC Davis Part-Time MBA Ranked in Nation’s Top 9%
Fourth Consecutive Year among U.S News & World Report's Premier Programs

Image of UC Davis Part-Time MBA Ranked in Nation’s Top 9%

(Davis, CA) — The UC Davis Part-Time MBA program offered in Sacramento and the San Francisco Bay Area is ranked among the top 9% in the U.S., according to U.S. News & World Report’s latest graduate business school rankings.

At No. 29, this is the fourth consecutive year the UC Davis Part-Time MBA program is among the top AACSB International-accredited part-time MBA programs surveyed. This year, there were 323 part-time MBA programs surveyed.

News Release

UC Davis Full-Time MBA Ranked among Nation’s Premier Programs for 20th Consecutive Year
MBA Programs among Top 10% in U.S.
Record Salary and Bonus

Image of UC Davis Full-Time MBA Ranked among Nation’s Premier Programs for 20th Consecutive Year

(Davis, CA) — The UC Davis Graduate School of Management’s Full-Time MBA program is ranked among the premier business schools in the nation for the 20th consecutive year, according to U.S. News & World Report’s latest graduate business school rankings released today.

U.S. News’ latest ranking places the Full-Time MBA program at No. 48, placing it among the top 10% of the 464 Association to Advance Collegiate Schools of Business International’s accredited full-time MBA programs surveyed.

Key statistics from the School’s Full-Time MBA ranking include:

News Release

UC Davis Graduate School of Management partners with Lawrence Livermore and Sandia National Labs to drive technologies from lab to market

Image of UC Davis Graduate School of Management partners with Lawrence Livermore and Sandia National Labs to drive technologies from lab to market

(Davis, Calif.) – With a joint goal of speeding the transfer of new technologies from the laboratory to the commercial marketplace, the UC Davis Graduate School of Management, Lawrence Livermore National Laboratory and Sandia National Laboratories have announced a new partnership for researchers to develop their entrepreneurial skills.

Spotlight Story

Vickie Sherman MBA 13 Finds Her Passion, Her Career—and Herself

Image of Vickie Sherman MBA 13 Finds Her Passion, Her Career—and Herself

What opportunities, decisions, events have shaped your professional life?

My career path has been a climb across a jungle gym rather than a tangent up a corporate ladder. As a child, I used to thumb through the three-inch JCPenney catalogue, picking out the professional women who I would grow to be. I wanted to rule the world from a corner office in a suit and heels. I wanted to shed my humble origins and become Corporate Barbie.

Spotlight Story

MBA Student Consultants Make an IMPACT
Projects Put Business Needs Front and Center

Image of MBA Student Consultants Make an IMPACT

Agilent Technologies’ Electronic Measurement Group is a $3.6 billion business that over the past decade has seen a dramatic shift in its customer base from U.S., and Western European customers to predominantly Asia-based customers. Today, the majority of the division’s revenues are generated outside of the U.S., with an increasing concentration in China.