Institutional Investors as Short Sellers?

36 Pages Posted: 13 Jan 2019 Last revised: 17 Sep 2019

See all articles by Peter Molk

Peter Molk

University of Florida Levin College of Law

Frank Partnoy

University of California, Berkeley - School of Law

Date Written: January 3, 2019

Abstract

Short selling has the potential to improve the efficiency and fairness of equity markets. Yet institutional investors face both private and regulatory constraints to short selling. We document these obstacles and consider the potential benefits of removing them. We advocate that institutional investors engage in more short selling as part of overall net-long equity strategies, such as a leveraged passive equity index combined with an actively managed short position of a size comparable to the amount of leverage.

Keywords: short selling, activism, institutional investors, corporate governance, securities law

JEL Classification: G34, G38, K22

Suggested Citation

Molk, Peter and Partnoy, Frank, Institutional Investors as Short Sellers? (January 3, 2019). 99 Boston University Law Review 837 (2019); University of Florida Levin College of Law Research Paper No. 19-23. Available at SSRN: https://ssrn.com/abstract=3309731

Peter Molk (Contact Author)

University of Florida Levin College of Law ( email )

P.O. Box 117625
Gainesville, FL 32611-7625
United States

Frank Partnoy

University of California, Berkeley - School of Law ( email )

215 Boalt Hall
Berkeley, CA 94720-7200
United States

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