This research finds empirical evidence that naked short sales contribute to the ability of investors to manipulatively short down the value of firms in need of external capital. The findings are also consistent with a hypothesis that the announcement effect of a new stock issue is merely a proxy...

This paper analyzes market mispricings as a function of arbitragers' confidence in their valuation estimates and subjective predictions about the future trades of other investors. New insights on the nature of investor psychology are revealed that help explain market cycles and anomalies like...