When firms announce a merger or acquisition, shareholders, analysts, and the media respond. Firms are less likely to complete a deal when those reactions are negative. We, however, uncover a scenario where the opposite occurs. When short interest (i.e., the percentage of shares shorted) increases following announcement of a deal, managers at firms become more likely to complete the deal. We theorize that short selling after deal announcement constitutes an ego threat to managers that induces escalation of commitment. This is because short sellers are adversarial, or they win when stock prices fall. Moreover, we argue that this managerial response is heightened in situations where managers are more likely to be defensive about their decisions, such as when the deal is large or the target firm is publicly-traded. Our empirical findings lend support to the arguments.

当企业宣布合并或收购时，股东，分析师和媒体都会做出回应。当这些反应为负面时，公司完成交易的可能性较小。但是，我们发现了发生相反情况的情况。宣布交易后，当短期权益（即，卖空的股份的百分比）增加时，公司的经理人更有可能完成交易。我们认为，交易公告后的卖空构成对经理的自我威胁，会导致承诺升级。这是因为卖空者是对抗性的，或者当股票价格下跌时他们会获胜。此外，我们认为，在管理人员更可能对自己的决定采取防御措施的情况下，例如当交易规模较大或目标公司是公开交易的情况下，这种管理反应会增强。