Short Selling and Trading Abuses on Nasdaq

Authors

  • Robert L. Albert Jr. Assistant Professor of Finance, Morehead State University, Morehead, KY 40351
  • Timothy R. Smaby Assistant Professor of Finance, Penn State ErieDThe Behrend College, Station Road, Erie, PA 16563-1400
  • H. David Robison Associate Professor of Economics, La Salle University, Philadelphia, PA 19141

DOI:

https://doi.org/10.1016/S1057-0810(97)90030-5

Abstract

We examine the potential for short-selling trading abuses unique to Nasdaq during a period when there was no up-tick rule and no effective prohibitions against "naked" shortselling. Wefindthat(a)shortsellersearnedsignificantabnormalreturnsonNas- daq securities, but these were smaller than on NYSF_/AMEX securities; (b) they did not destabilize markets by selling intofalling markets and exacerbating price drops; and (c) Nasdaq short sellers may be more susceptible than NYSE/AMEX shorts to "short squeezes." Our results cast doubt on the appropriateness of recent regulatory reforms establishedfor Nasdaq and public concern over Nasdaq short-selling abuses.

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Published

1997-03-30

How to Cite

Albert, R. L., Smaby, T. R., & Robison, H. D. (1997). Short Selling and Trading Abuses on Nasdaq. Financial Services Review, 6(1), 27–39. https://doi.org/10.1016/S1057-0810(97)90030-5

Issue

Vol. 6 No. 1 (1997): Financial Services Review

Section

New Original Submission

License

Copyright (c) 1997 JAI Press Inc.

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