We examine the effect of short sale constraints on corporate investment in a sample of non-US regulatory regime shifts. As expected, regulatory changes reducing short sale constraints are associated with stock price declines, reduced capex, and lower asset growth. In contrast to US studies,...

We examine the relation between short-sale constraints and stock price crash risk. To establish causality, we take advantage of a regulatory change from the Securities and Exchange Commission (SEC)'s Regulation SHO pilot program, which temporarily lifted short-sale constraints for randomly...