"Are Short-Selling Restrictions Effective?" by Yashar H. Barardehi, Andrew Bird et al.
 

Document Type

Article

Publication Date

8-22-2024

Abstract

Despite strong theoretical predictions based on disagreement, limited empirical evidence links short-selling restrictions to higher prices. We test this relationship using quasi-experimental methods based on rule 201, a threshold-based policy that restricts aggressive short selling when intraday returns cross −10%. When comparing stocks on either side of the threshold in the same hour of trading, we find that the restriction leads to 8% lower short-sale volume and 35 basis points higher daily returns. These price effects do not reverse after the restriction is lifted.

Comments

This is a pre-copy-editing, author-produced PDF of an article accepted for publication in Management Science, volume 71, issue 5, in 2025 following peer review. This article may not exactly replicate the final published version. The definitive publisher-authenticated version is available online at https://doi.org/10.1287/mnsc.2024.4987.

Peer Reviewed

1

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