Shackling short sellers: The 2008 shorting ban

Shackling short sellers: The 2008 shorting ban

In September 2008, the U.S. Securities and Exchange Commission (SEC) temporarily banned most short sales in nearly 1,000 financial stocks. We examine the ban's effect on market quality, shorting activity, the aggressiveness of short sellers, and stock prices. The ban's effects are concentr...

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Bibliographic Details
Main Authors: BOEHMER, Ekkehart, JONES, Charles M., ZHANG, Xiaoyan
Format: text
Language:English
Published: Institutional Knowledge at Singapore Management University 2013
Subjects:
short sales
price efficiency
option markets
liquidity
uncertainty
quality
world
time
bear
Finance and Financial Management
Portfolio and Security Analysis
Online Access:https://ink.library.smu.edu.sg/lkcsb_research/4687
https://ink.library.smu.edu.sg/context/lkcsb_research/article/5686/viewcontent/TacklingShortSellers2008Ban_rfs_2013.pdf
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Institution: Singapore Management University
Language: English
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Summary:In September 2008, the U.S. Securities and Exchange Commission (SEC) temporarily banned most short sales in nearly 1,000 financial stocks. We examine the ban's effect on market quality, shorting activity, the aggressiveness of short sellers, and stock prices. The ban's effects are concentrated in larger stocks; there is little effect on firms in the lower half of the size distribution. Although shorting activity drops by about 77% in large-cap stocks, stock prices appear unaffected by the ban. All but the smallest quartile of firms subject to the ban suffer a severe degradation in market quality.

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