Institutional Investors as Short Sellers?
36 Pages Posted: 13 Jan 2019 Last revised: 17 Sep 2019
Date Written: January 3, 2019
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: Suggested Citation