Are Short-Selling Restrictions Effective?

The views expressed here are those of the authors and not necessarily the views of the Office of the Comptroller of the Currency, the U.S. Department of the Treasury, or any federal agency, and do not establish supervisory policy, requirements, or expectations. The views stated herein are those of the authors alone and are not necessarily the views of the the Office of Financial Research or the U.S. Department of the Treasury. The authors wish to thank the editor, Bruno Biais, and two referees for helpful guidance. The authors are grateful for comments received from Rui Albuquerque, Torben Andersen, Ted Berg, Kelley Bergsma, Dan Bernhardt, Julio Crego, Hans Degryse, Brent Glover, Larry Harris, Peter Haslag, Terry Hendershott, Burton Hollifield, Harrison Hong, Eric Hughson, Olivia Huseman, PK Jain, Tim Johnson, Christopher Jones, Nikolaos Karagiannis, Daniel Karney, Andrew Karolyi, David Lesmond (discussant), Stefan Lewellen, Zhi Li, Vitaly Meursault, Nate Neligh, Lars Nordén, Yoshio Nozawa (discussant), Mark Paddrik, Jackson Pfeiffer, Dave Porter, Matthew Ringgenberg (discussant), John Ritter, Priya Sankar, Michael Schneider, Duane Seppi, Timothy Shields, Esad Smajlbegovic (discussant), Chester Spatt, Marc Weidenmier, Ingrid Werner, Mao Ye, Peyton Young, and Andrew Zhang as well as seminar participants at Carnegie Mellon University, Chapman University, Ohio University, Oklahoma, the Office of Financial Research, the Securities and Exchange Commission, Financial Management Association meetings, Hong Kong University of Science and Technology Finance Symposium, Sustainable Architecture for Finance in Europe Market Microstructure, and the Western Finance Association meetings. The authors also thank Kevin Roshak and Jonathan Brogaard for generously making available a list of stock dates with individual price limit tests. Any errors are the authors’ own.