ETF Short Interest and Failures-to-Deliver: Naked Short-Selling or Operational Shorting?

2017 ◽  
Author(s):  
Richard B. Evans ◽  
Rabih Moussawi ◽  
Michael S. Pagano ◽  
John Sedunov
Keyword(s):  
Short Selling ◽  
Naked Short Selling ◽  
Short Interest

Short‐sell moratorium effects on regional bank performance

2013 ◽  
Vol 5 (2) ◽  
pp. 92-110
Author(s):  
Michael Devaney ◽  
William L. Weber
Keyword(s):  
Trading Volume ◽  
Short Selling ◽  
Bank Risk ◽  
Too Big To Fail ◽  
Content Type ◽  
Naked Short Selling ◽  
Regional Bank ◽  
Capm Model ◽  
Short Sell ◽  
Regional Banks

PurposeThe purpose of this paper is to investigate the effects of the 2008 SEC short‐sell moratorium on regional bank risk and return. The paper also examines the decline in “failures to deliver” securities in the wake of SEC short‐sell moratorium.Design/methodology/approachIn total, six regional bank portfolios are derived and the beta coefficients from a CAPM model are estimated using the integrated generalized autoregressive conditional heteroskedasticity (IGARCH) method accounting for the short‐sell moratorium. Data on 110 regional banks in six US regions from January 2002 to December 30, 2011 are used to estimate the model.FindingsThe ban on naked short selling and the SEC short‐sell moratorium significantly increased individual bank risk for a majority of banks in six geographic regions, but also increased return in three of three regions. There was also reduced naked short selling as failures to deliver securities declined sharply after the September 2008 moratorium took effect.Originality/valueRegional banks have generally not achieved the size needed to be deemed “too big to fail” by policy‐makers. Thus, policy changes such as the SEC short‐sell moratorium might be expected to have larger effects on regional banks than on larger banks, which might be shielded from the policy change by having achieved “too big to fail” status. The authors' results are consistent with research that has shown that short‐sell restrictions increase risk by reducing liquidity and trading volume.

Accounting irregularities and failure to deliver

2014 ◽  
Vol 40 (8) ◽  
pp. 770-786 ◽  
Author(s):  
Naomi E. Boyd ◽  
Ann Marie Hibbert ◽  
Ivelina Pavlova
Keyword(s):  
Design Methodology ◽  
Institutional Ownership ◽  
Short Selling ◽  
Accounting Restatements ◽  
Content Type ◽  
Short Sellers ◽  
Naked Short Selling ◽  
The Relationship

Purpose – The purpose of this paper is to examine the relationship between naked short selling and accounting irregularities that cause a firm to issue a restatement. Design/methodology/approach – Using the level of abnormal fails-to-deliver as a proxy for naked short selling, the paper looks for evidence of increased naked short selling in anticipation of, as well as in response to these announcements. Findings – Larger firms and firms with a higher percentage of institutional ownership experience greater levels of fails prior to the announcement day, while smaller firms are more likely to be targets of naked short sellers after the announcement. The paper also finds that more transparent announcements are associated with more abnormal fails. Originality/value – This paper is the first research to study the relation between naked short selling and accounting restatements.

scholarly journals Equity Short Selling and the Cost of Debt

2020 ◽  
Vol 13 (2) ◽  
pp. 41-53
Author(s):  
Ali Nejadmaleyeri ◽  
Bilal Erturk
Keyword(s):  
Empirical Evidence ◽  
Corporate Bonds ◽  
Equity Markets ◽  
Short Selling ◽  
Credit Spreads ◽  
Cost Of Debt ◽  
Short Sales ◽  
Pertinent Information ◽  
Short Interest ◽  
The Cost

Empirical evidence suggests that short sales have pertinent information about firm fundamentals. If so, then information from short selling in liquid equity markets can be informative for infrequently traded corporate bonds. The adverse information conveyed by short interest should mean higher cost of debt. Using a large sample of corporate bonds, we examine whether lagged equity short interest affects credit spreads. Highly shorted firms do experience wider credit spreads in the subsequent months. Moreover, the increase in short interest leads to higher credit spreads. Short interest thus seems to contain adverse information about firm fundamentals that can prove useful to bond investors. 

scholarly journals short-selling and its applications on the Saudi Arabia Stock Exchange Fiqhi Authentication study

2020 ◽  
Vol 28 (13) ◽  
pp. 111-137
Author(s):  
د. أحمد بن هلال الشيخ د. أحمد بن هلال الشيخ
Keyword(s):  
Saudi Arabia ◽  
Research Methodology ◽  
Stock Exchange ◽  
Short Selling ◽  
Exchange Traded Funds ◽  
Research Subject ◽  
Put Options ◽  
Study Research ◽  
Naked Short Selling

Research Subject: short-selling and its applications on the Saudi Arabia Stock Exchange. Fiqhi Authentication study Research Objectives: - Clarifying the short-selling and its applications on the Saudi Arabia Stock Exchange. - Alternatives to Short-selling Research Methodology: Analytical Descriptive. The most important findings. There is a distinction between naked short-selling – the selling of stocks that the person “does not own” or without first obtaining approval for borrowing them – and the regular short-selling where an investor sells stocks borrowed from its owner and return them back later after a certain time – covered shorting. Regular short-selling is a combined contract of sale and loan transactions, where the loan is set against a certain dividends to the borrower to be paid to the broker. There is a number of alternatives to short-selling such as: put options and inverse exchange-traded funds.

scholarly journals Naked Short Selling: Is it Information-Based Trading?

2013 ◽  
Author(s):  
Harrison Liu ◽  
Sean T. McGuire ◽  
Edward P. Swanson
Keyword(s):  
Short Selling ◽  
Naked Short Selling

Short interest in mergers: anomalies in the overvaluation hypothesis

2018 ◽  
Vol 44 (8) ◽  
pp. 972-991 ◽  
Author(s):  
Sean M. Davis ◽  
Jeffrey M. Coy ◽  
Fernando Guillen Solis
Keyword(s):  
Longitudinal Data ◽  
Design Methodology ◽  
Short Selling ◽  
Share Price ◽  
Content Type ◽  
Acquiring Firms ◽  
Growing Body ◽  
Short Interest ◽  
Acquisition Likelihood ◽  
Interest Levels

Purpose High short interest is associated with overvaluation, and the purpose of this paper is to find contradictions to the commonly held “overvaluation hypothesis” when merger and acquisition (M&A) targets are examined. This paper extends the work of Ben-David et al. (2015), who confirm high short interest indicates overvaluation when focused on acquiring firms. Design/methodology/approach Short interest is examined as a predictor of acquisition likelihood using longitudinal data for US firms from 2003 to 2013. How short interest impacts the premiums paid by acquiring firms is examined with target, acquirer and deal characteristics. Findings M&A targets have high short interest and short interest increases acquisition likelihood, suggesting undervaluation. Highly shorted firms also experience outsized reductions in share price prior to merger announcements, and the premiums paid are also significantly predicted by short interest levels. Research limitations/implications Short selling activity can be motivated for reasons other than overvaluation, and many short positions can be held for long periods before they are closed, leading to high short interest levels for extended periods. Therefore, investors and researchers are cautioned that high short interest levels may exist in stocks that have already declined in price and could be poised for a reversal. Originality/value This study adds to the growing body of work indicating that short interest might not be the signal of overvaluation most researchers accept it to be.

scholarly journals Naked Short Selling and Market Returns

2012 ◽  
Vol 38 (3) ◽  
pp. 133-142 ◽  
Author(s):  
Thomas J. Boulton ◽  
Marcus V. Braga-Alves
Keyword(s):  
Short Selling ◽  
Market Returns ◽  
Naked Short Selling

scholarly journals Naked Short Selling and Market Returns

2012 ◽  
pp. 120223220327007 ◽  
Author(s):  
Thomas J Boulton ◽  
Marcus V Braga-Alves
Keyword(s):  
Short Selling ◽  
Market Returns ◽  
Naked Short Selling
Sign in / Sign up

Export Citation Format

Share Document