Predatory short sales and bailouts
| dc.contributor.author | Kranz, Sebastian | |
| dc.contributor.author | Löffler, Gunter | |
| dc.contributor.author | Posch, Peter N. | |
| dc.date.accessioned | 2017-12-04T13:50:38Z | |
| dc.date.available | 2017-12-04T13:50:38Z | |
| dc.date.issued | 2017 | |
| dc.description.abstract | This paper extends the literature on predatory short selling and bailouts through a joint analysis of the two. We consider a model with informed short sales, as well as uninformed predatory short sales, which can trigger the inefficient liquidation of a firm. We obtain several novel results: A government commitment to bail out insolvent firms with positive probability can increase welfare because it selectively deters predatory short selling without hampering desirable informed short sales. Contrasting a common view, bailouts can be optimal ex ante but undesirable ex post. Furthermore, bailouts in our model are a better policy tool than short selling restrictions. Welfare gains from the bailout policy are unevenly distributed: shareholders gain while taxpayers lose. Bailout taxes allow ex-ante Pareto improvements. | en |
| dc.identifier.uri | http://hdl.handle.net/2003/36232 | |
| dc.identifier.uri | http://dx.doi.org/10.17877/DE290R-18246 | |
| dc.language.iso | en | de |
| dc.relation.ispartofseries | Discussion Paper / SFB823;23/2017 | |
| dc.subject | government bailouts | en |
| dc.subject | short sale bans | en |
| dc.subject | predatory trading | en |
| dc.subject | short sales | en |
| dc.subject.ddc | 310 | |
| dc.subject.ddc | 330 | |
| dc.subject.ddc | 620 | |
| dc.title | Predatory short sales and bailouts | en |
| dc.type | Text | de |
| dc.type.publicationtype | workingPaper | de |
| dcterms.accessRights | open access | |
| eldorado.secondarypublication | false | de |