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Are Short-sellers Different?

Author

Listed:
  • Bardong, Florian
  • Bartram, Söhnke M.
  • Yadav, Pradeep K.

Abstract

While theoretical models strongly suggest that short-sales are mainly driven by private information, recent empirical evidence of has been rather mixed. This paper contributes to the discussion by looking at various potential motives to sell short and compares these with regular buys and sales with regards to variation in the information contents and timing of short-sales. We find that short-sellers have different private information than regular buyers and sellers, which seems to have a longer life-time, being related to previous buying pressure. The information advantage of short-sellers seems originating from skilled analysis of publicly available data rather than corporate insider information. Short-sales provide an important stabilizing role by providing liquidity in periods of uninformed buying pressure. Overall, we find that short-sales are driven by multiple trade motives, which sets short-sellers apart from regular buyers and sellers.

Suggested Citation

  • Bardong, Florian & Bartram, Söhnke M. & Yadav, Pradeep K., 2007. "Are Short-sellers Different?," MPRA Paper 13585, University Library of Munich, Germany, revised 16 Nov 2008.
  • Handle: RePEc:pra:mprapa:13585
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    File URL: https://mpra.ub.uni-muenchen.de/13585/1/MPRA_paper_13585.pdf
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    References listed on IDEAS

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    More about this item

    Keywords

    Short-selling; Information asymmetry; Microstructure;

    JEL classification:

    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G19 - Financial Economics - - General Financial Markets - - - Other

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