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Liquid institutions’ response to the presence of short sellers in the market
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Orientador(es)
Resumo(s)
The aim of this study is to examine the influence of institutions' liquidity on the level of
lending supply, short sale constraints and future stock returns, after an increase in shorting
demand. By considering the interaction between outward demand shocks and the level of
institutions’ liquidity we find that, in times of increasing shorting demand, the level of
institutions’ liquidity is not responsible for either restricting the entrance of novel short sellers
in the market or hurting existing ones; in addition, we do not find evidence of any decrease in
lending supply or future returns, nor increases in loan fees or arbitrage risk.
Descrição
Palavras-chave
Short sale constraints Liquid institutional investors Equity-lending supply Stock returns