Short Selling

Short selling plays a unique role in financial markets. Short selling’s institutional structure is distinct from other types of trades, and short sellers have been shown to be more informed than other types of traders. This review discusses short sellers’ motivation, the institutional mechanics of short selling, the empirical findings on short selling, the regulation of short selling, the connection between corporate events and short selling, and the equity lending market. The review assesses the current direction of research as well as summarizes the current state of knowledge about the subject.