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...

We find that institutional investors' local culture of religiosity influences their stock lending decisions and short-sell constraints. Firms with higher ownerships by blockholders located in more religious counties are associated with higher utilization of lendable shares. This effect is driven...