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Does short-selling amplify price declines or align stocks with their fundamental values?

Curtis, Asher; Fargher, Neil


Critics of short selling argue that short sellers amplify price declines by targeting firms with falling prices in an unwarranted manner. Contrary to this viewpoint, we find that increases in short interest for firms following a price decline are associated with measures of overpricing based on financial statement analysis. Our results extend to short-selling activity following marketwide declines. We also find evidence consistent with the profitability of short selling following price declines...[Show more]

CollectionsANU Research Publications
Date published: 2014
Type: Journal article
Source: Management Science
DOI: 10.1287/mnsc.2013.1872


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