In this paper, we consider the optimal selling strategy for an asset securitization originator (the issuer) when the potential buyers hold diverse beliefs. We find that the tranching process is beneficial to the issuer because it increases the total sale price. We also consider the optimal...

We argue that hedge funds more aggressively buy underpriced stocks when they can short and, as such, protect their stock purchases from industry fluctuations. We utilize the institutional feature in Hong Kong in virtue of which only stocks added to a special list can be shorted. Our first-stage...