Class 15
Short Selling and Forensic Financial Analysis
Description
This session examines short selling and the use of accounting, disclosure, and external information in forensic financial analysis. Understanding this setting is important because short sellers and other external analysts have strong incentives to identify inconsistencies, aggressive reporting choices, and information that may not yet be reflected in prevailing assessments of a firm.
Motivation
How do sophisticated outsiders identify potential problems?
Review
Screening and regulatory analytics showed how unusual financial characteristics and regulatory scrutiny can identify issues warranting investigation. This session introduces another perspective by examining how external analysts construct and challenge claims using combinations of accounting and non-accounting evidence.