This Finance survey examines (a) Allowing short selling of financial securities, such as stocks and government bonds, leads to prices that, on average, are closer to their fundamental values; (b) When short sellers start to establish substantial short positions in a stock, the stock is likely to have been overvalued; (c) Requiring investors to disclose short positions in a stock at the equivalent threshold as they are required to do for long positions would improve the informativeness of stock prices
Keyword: short selling
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This week's European Economic Experts Panel statements:
A) Allowing short selling of financial securities, such as stocks and government bonds, leads to prices that, on average, are closer to their fundamental values.
B) Requiring investors to disclose short positions in a stock at the equivalent threshold as they are required to do for long positions would result in significantly less short selling.
C) Regulatory restrictions on short selling - such as no naked shorts, temporary bans in times of crisis - make it difficult for optimists and pessimists to have equal influence on asset prices.
This week's US Economic Experts Panel statements:
A) Bans on the short selling of financial securities, such as stocks and government bonds, would lead to prices that are further, on average, from their fundamental values.
B) Requiring investors to disclose short positions in a stock at the equivalent threshold as they are required to do for long positions would improve the accuracy of stock prices.
This week’s IGM Economic Experts Panel poll statement:
Bans on the short selling of financial securities, such as stocks and government bonds, lead to prices that are further, on average, from their fundamental values.
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