Short-selling activities in the time of COVID-19

Authors: Luu, Ellie;

Xu, Fangming;

Zheng, Liyi

Source: The British Accounting Review

Full text

: https://doi.org/10.1016/j.bar.2023.101216

Abstract

This study examines the daily short-selling activities in the U.S. market during the early 2020 outbreak of the COVID-19 global pandemic. Our findings indicate firms that are more sensitive to the shock (i.e., with high foreign exposure, low financial or operating flexibility, or high supply-chain exposure) were shorted more heavily. Moreover, short-selling activities during the COVID-19 pandemic, blamed for triggering stock market crashes, were primarily concentrated around overpriced stocks. This finding supports the argument that short selling plays a prominent role in improving price discoveries. Our research provides timely empirical evidence supporting the U.S. Securities and Exchange Commission’s (SEC) non-intervention approach in banning short selling in the U.S. market.

Rights

http://creativecommons.org/licenses/by/4.0/

Cite as

Luu, E., Xu, F. & Zheng, L. 2023, 'Short-selling activities in the time of COVID-19', The British Accounting Review, article no: 101216. https://doi.org/10.1016/j.bar.2023.101216

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DOI: https://doi.org/10.1016/j.bar.2023.101216

Repository URI: https://strathprints.strath.ac.uk/85555/