Why Do Short Selling Bans Increase Adverse Selection and Decrease Price Efficiency?
Published in The Review of Asset Pricing Studies • Oct 4, 2020
NobleIDNI9P95W50R33S31
Authors:
Peter N Dixon
Abstract
Abstract When short selling is costly, owners of an asset have greater incentive to become informed than nonowners because trading on negative information is easier for them. Thus, information acquisition concentrates among investors owning the asset. A short selling ban restricts selling to only th...
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