Shackling Short Sellers: The 2008 Shorting Ban

By Ekkehart Boehmer, Charles M. Jones, Xiaoyan Zhang. 2013

429 citations recorded by the source corpus.

In September 2008, the U.S. Securities and Exchange Commission (SEC) temporarily banned most short sales in nearly 1,000 financial stocks. We examine the ban's effect on market quality, shorting activity, the aggressiveness of short sellers, and stock prices. The ban's effects are concentrated in larger stocks; there is little effect on firms in the lower half of the size distribution. Although shorting activity drops by about 77% in large-cap stocks, stock prices appear unaffected by the ban. All but the smallest quartile of firms subject to the ban suffer a severe degradation in market quality. The Author 2013. Published by Oxford University Press on behalf of The Society for Financial Studies. All rights reserved. For Permissions, please e-mail: journals.permissions@oup.com., Oxford University Press.

Subfields: Accounting, Finance

View Paper: https://www.semanticscholar.org/paper/493dac795e71baded8362a1cbed033c4adc92873

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Citations in the corpus

Short-Selling Bans Around the World: Evidence from the 2007-09 Crisis (2013, neutral): “Finally, the bans are not associated with better stock price performance, the U.S. being the only exception: we find that bans are not significantly correlated with excess returns in countries with short-selling bans on financials, except in the U.S. where the correlation is positive and…”
In Short Supply: Short Sellers and Stock Returns (2015, positive): “Indeed, a number of studies show short sale constraints can impede price discovery in the underlying stocks.5 Even temporary short-selling bans appear to have an effect on pricing efficiency in the banned stocks (Battalio and Schultz 2010; Boehmer et al. 2012).”