This study investigates the role of short sales in mitigating post-shock anomalies in stock returns within the context of China's evolving short-sales regulations. Utilizing a unique dataset of daily short-sale volumes, this research examines how short sellers influence stock price behavior...

This study examines stock borrowing costs in Japan's centralized lendable stock market, focusing on differences between 'hard-to-borrow' and 'easy-to-borrow' stocks over six months of daily data. This study employs a comprehensive methodology to examine metrics such as the short interest ratio,...

Using microdata on stock-level lending positions from German mutual funds, we show that active funds use the equity lending market to obtain information about short sale demand. Funds reduce long positions in response to these demand signals, which allows fund managers to front-run public...

This study investigates the effect of short sales on firms' use of trade credit. Using a sample of 3262 Chinese listed firms from 2007 to 2019, the analysis results show that both the deregulation and the magnitude of short sales negatively affect trade credit. The transmission mechanism...

Previous studies show that individual investors play a dominant role in China's stock market. Their behavior of chasing-rise being stronger than killing-fall leads to asymmetry of feedback trading. Our article investigates how mutual funds react to this market force. Using China's stock and fund...

Purpose This study delves into the nuanced implications of short-sale constraints on stock prices within the context of stock market efficiency. While existing research has explored this relationship, inconsistencies persist in their findings. The purpose of this study is to conduct a...

Purpose: Both short sellers and margin traders believe in active investment. However, they have the opposite opinions about the prediction of future share price direction: while short sellers are those who predict future price declines, investors buying on margin are those who predict future...

Using the exogenous shock of the COVID-19 pandemic, we study how informed market participants evaluate fiscal space. Short-selling activity shifted upon the onset of the pandemic towards companies with low financial flexibility only in countries with limited fiscal space. Among these companies,...

Purpose: Prior studies suggest that an informative stock price helps corporate investment decisions. Since short-selling improves the informativeness of stock prices, short-selling could influence corporate investment. This study examines this conjecture. Design/methodology/approach: Using...

Emerging stock markets are dominated with overconfident individual investors and in those markets short-sale constraints are frequently used to promote market stability. The unique market participants and regulations may influence the formation of stock prices and potentially lead to stock...

This study examines how short-sale constraints affect investors’ information acquisition and thereby shape stock price efficiency. By exploiting two settings that relax short-sale constraints in the US and China, respectively, we find that the removal of short-sale constraints increases...

I study how hedge funds strategically disclose their private information during short-selling campaigns. Using data on hedge funds' voluntary announcements and daily short positions in the EU market, I document the existence of two groups of funds: Announcers and Followers. Announcers, typically...

The gambler’s fallacy is the incorrect notion that after observing a particular (random) event more frequently than normal, that event is less likely to occur in the future. The main objective of our analysis is to provide tests of the gambler’s fallacy in financial markets by examining...