Question 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.
Responses
Responses weighted by each expert's confidence
Question 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.
Responses
Responses weighted by each expert's confidence
Question 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.
Responses
Responses weighted by each expert's confidence
Question A Participant Responses
| Participant | University | Vote | Confidence | Bio/Vote History |
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 Franklin Allen |
Imperial College London | Bio/Vote History | ||
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This is the classical theory of price formation and much but not all of the time it works well. But corners and squeezes can prevent this.
-see background information here |
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 Pol Antras |
Harvard | Bio/Vote History | ||
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 Oriana Bandiera |
London School of Economics | Bio/Vote History | ||
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 Olivier Blanchard |
Peterson Institute | Bio/Vote History | ||
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the usual caveat. the danger of short squeezes.
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 Nicholas Bloom |
Stanford | Bio/Vote History | ||
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 Richard William Blundell |
University College London | Did Not Answer | Bio/Vote History | |
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 Elena Carletti |
Bocconi | Did Not Answer | Bio/Vote History | |
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 Jean-Pierre Danthine |
Paris School of Economics | Bio/Vote History | ||
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 Paul De Grauwe |
LSE | Bio/Vote History | ||
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 Jan Eeckhout |
UPF Barcelona | Bio/Vote History | ||
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 Ernst Fehr |
Universität Zurich | Bio/Vote History | ||
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 Xavier Freixas |
Barcelona GSE | Bio/Vote History | ||
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 Nicola Fuchs-Schündeln |
Goethe-Universität Frankfurt | Did Not Answer | Bio/Vote History | |
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 Jordi Galí |
Barcelona GSE | Bio/Vote History | ||
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 Francesco Giavazzi |
Bocconi | Bio/Vote History | ||
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 Rachel Griffith |
University of Manchester | Bio/Vote History | ||
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 Veronica Guerrieri |
Chicago Booth | Did Not Answer | Bio/Vote History | |
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 Luigi Guiso |
Einaudi Institute for Economics and Finance | Bio/Vote History | ||
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 Sergei Guriev |
Sciences Po | Bio/Vote History | ||
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 Patrick Honohan |
Trinity College Dublin | Bio/Vote History | ||
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"On average" is key.
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 Beata Javorcik |
University of Oxford | Bio/Vote History | ||
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 Jan Pieter Krahnen |
Goethe University Frankfurt | Bio/Vote History | ||
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If short sellers push stocks away from fundamentals, investor tend to search for facts, and may build up "repairing" counter positions.
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 Botond Kőszegi |
Central European University | Did Not Answer | Bio/Vote History | |
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 Eliana La Ferrara |
Harvard Kennedy | Did Not Answer | Bio/Vote History | |
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 Christian Leuz |
Chicago Booth | Bio/Vote History | ||
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A substantial body of research supports the notion that short selling contributes to price efficiency (rather than hurts). See e.g. below.
-see background information here -see background information here -see background information here -see background information here |
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 Thierry Mayer |
Sciences-Po | Did Not Answer | Bio/Vote History | |
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 Costas Meghir |
Yale | Bio/Vote History | ||
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 Peter Neary |
Oxford | Did Not Answer | Bio/Vote History | |
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 Marco Pagano |
Università di Napoli Federico II | Bio/Vote History | ||
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There is ample empirical evidence in support of this claim. See for instance Beber and Pagano, Journal of Finance, 2013.
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 Lubos Pastor |
Chicago Booth | Bio/Vote History | ||
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Otherwise the views of the pessimists are not fully reflected in market prices (e.g., Miller JF 1977).
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 Torsten Persson |
Stockholm University | Did Not Answer | Bio/Vote History | |
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 Christopher Pissarides |
London School of Economics and Political Science | Did Not Answer | Bio/Vote History | |
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 Richard Portes |
London Business School | Bio/Vote History | ||
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'On average'. But there are well-documented cases in which speculative shorting leads to (intended) divergence from fundamentals.
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 Canice Prendergast |
Chicago Booth | Bio/Vote History | ||
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 Carol Propper |
Imperial College London | Bio/Vote History | ||
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 Imran Rasul |
University College London | Did Not Answer | Bio/Vote History | |
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 Lucrezia Reichlin |
London Business School | Did Not Answer | Bio/Vote History | |
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 Rafael Repullo |
CEMFI | Bio/Vote History | ||
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 Hélène Rey |
London Business School | Did Not Answer | Bio/Vote History | |
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 Antoinette Schoar |
MIT | Bio/Vote History | ||
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 Kjetil Storesletten |
University of Minnesota | Bio/Vote History | ||
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 Daniel Sturm |
London School of Economics | Bio/Vote History | ||
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 John Van Reenen |
LSE | Bio/Vote History | ||
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 John Vickers |
Oxford | Bio/Vote History | ||
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 Hans-Joachim Voth |
University of Zurich | Bio/Vote History | ||
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 Karl Whelan |
University College Dublin | Did Not Answer | Bio/Vote History | |
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 Charles Wyplosz |
The Graduate Institute Geneva | Bio/Vote History | ||
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 Fabrizio Zilibotti |
Yale University | Did Not Answer | Bio/Vote History | |
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Question B Participant Responses
| Participant | University | Vote | Confidence | Bio/Vote History |
|---|---|---|---|---|
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Franklin Allen |
Imperial College London | Bio/Vote History | ||
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This is a difficult question to answer. Depends on the level that is being suggested in the question.
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Pol Antras |
Harvard | Bio/Vote History | ||
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Oriana Bandiera |
London School of Economics | Bio/Vote History | ||
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Olivier Blanchard |
Peterson Institute | Bio/Vote History | ||
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it would make short squeezes easier, and thus short sellers more careful.
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Nicholas Bloom |
Stanford | Bio/Vote History | ||
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Richard William Blundell |
University College London | Did Not Answer | Bio/Vote History | |
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Elena Carletti |
Bocconi | Did Not Answer | Bio/Vote History | |
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Jean-Pierre Danthine |
Paris School of Economics | Bio/Vote History | ||
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... but this would be a good thing!
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Paul De Grauwe |
LSE | Bio/Vote History | ||
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Jan Eeckhout |
UPF Barcelona | Bio/Vote History | ||
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Ernst Fehr |
Universität Zurich | Bio/Vote History | ||
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Xavier Freixas |
Barcelona GSE | Bio/Vote History | ||
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Nicola Fuchs-Schündeln |
Goethe-Universität Frankfurt | Did Not Answer | Bio/Vote History | |
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Jordi Galí |
Barcelona GSE | Bio/Vote History | ||
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Francesco Giavazzi |
Bocconi | Bio/Vote History | ||
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Rachel Griffith |
University of Manchester | Bio/Vote History | ||
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Veronica Guerrieri |
Chicago Booth | Did Not Answer | Bio/Vote History | |
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Luigi Guiso |
Einaudi Institute for Economics and Finance | Bio/Vote History | ||
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Sergei Guriev |
Sciences Po | Bio/Vote History | ||
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This is a good idea, long and short positions should be treated symmetrically. But the impact of the change on short-selling is not clear.
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Patrick Honohan |
Trinity College Dublin | Bio/Vote History | ||
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Might discourage some, encourage others.
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Beata Javorcik |
University of Oxford | Bio/Vote History | ||
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Jan Pieter Krahnen |
Goethe University Frankfurt | Bio/Vote History | ||
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Limits on long positions in stocks are far larger than typical short positions taken by individual investors. Thus, they are not binding.
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Botond Kőszegi |
Central European University | Did Not Answer | Bio/Vote History | |
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Eliana La Ferrara |
Harvard Kennedy | Did Not Answer | Bio/Vote History | |
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Christian Leuz |
Chicago Booth | Bio/Vote History | ||
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Disclosing shorts is not equivalent to disclosing longs. Short sellers are often intimidated & can be squeezed but serve important role.
-see background information here -see background information here |
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Thierry Mayer |
Sciences-Po | Did Not Answer | Bio/Vote History | |
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Costas Meghir |
Yale | Bio/Vote History | ||
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Peter Neary |
Oxford | Did Not Answer | Bio/Vote History | |
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Marco Pagano |
Università di Napoli Federico II | Bio/Vote History | ||
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Lubos Pastor |
Chicago Booth | Bio/Vote History | ||
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Torsten Persson |
Stockholm University | Did Not Answer | Bio/Vote History | |
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Christopher Pissarides |
London School of Economics and Political Science | Did Not Answer | Bio/Vote History | |
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Richard Portes |
London Business School | Bio/Vote History | ||
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Canice Prendergast |
Chicago Booth | Bio/Vote History | ||
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Carol Propper |
Imperial College London | Bio/Vote History | ||
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Imran Rasul |
University College London | Did Not Answer | Bio/Vote History | |
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Lucrezia Reichlin |
London Business School | Did Not Answer | Bio/Vote History | |
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Rafael Repullo |
CEMFI | Bio/Vote History | ||
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Hélène Rey |
London Business School | Did Not Answer | Bio/Vote History | |
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Antoinette Schoar |
MIT | Bio/Vote History | ||
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Kjetil Storesletten |
University of Minnesota | Bio/Vote History | ||
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Short positions around dividend dates can help avoid dividend taxation. Disclosure of short positions would mitigate this tax avoidance
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Daniel Sturm |
London School of Economics | Bio/Vote History | ||
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John Van Reenen |
LSE | Bio/Vote History | ||
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John Vickers |
Oxford | Bio/Vote History | ||
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Hans-Joachim Voth |
University of Zurich | Bio/Vote History | ||
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Karl Whelan |
University College Dublin | Did Not Answer | Bio/Vote History | |
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Charles Wyplosz |
The Graduate Institute Geneva | Bio/Vote History | ||
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Fabrizio Zilibotti |
Yale University | Did Not Answer | Bio/Vote History | |
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Question C Participant Responses
| Participant | University | Vote | Confidence | Bio/Vote History |
|---|---|---|---|---|
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Franklin Allen |
Imperial College London | Bio/Vote History | ||
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Bear raids (US) or short attacks (Europe) are not well understood theoretically so difficult to say.
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Pol Antras |
Harvard | Bio/Vote History | ||
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Oriana Bandiera |
London School of Economics | Bio/Vote History | ||
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Olivier Blanchard |
Peterson Institute | Bio/Vote History | ||
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but the trade off may be worth it
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Nicholas Bloom |
Stanford | Bio/Vote History | ||
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Richard William Blundell |
University College London | Did Not Answer | Bio/Vote History | |
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Elena Carletti |
Bocconi | Did Not Answer | Bio/Vote History | |
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Jean-Pierre Danthine |
Paris School of Economics | Bio/Vote History | ||
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Paul De Grauwe |
LSE | Bio/Vote History | ||
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Jan Eeckhout |
UPF Barcelona | Bio/Vote History | ||
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Ernst Fehr |
Universität Zurich | Bio/Vote History | ||
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Xavier Freixas |
Barcelona GSE | Bio/Vote History | ||
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Nicola Fuchs-Schündeln |
Goethe-Universität Frankfurt | Did Not Answer | Bio/Vote History | |
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Jordi Galí |
Barcelona GSE | Bio/Vote History | ||
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Francesco Giavazzi |
Bocconi | Bio/Vote History | ||
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Rachel Griffith |
University of Manchester | Bio/Vote History | ||
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Veronica Guerrieri |
Chicago Booth | Did Not Answer | Bio/Vote History | |
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Luigi Guiso |
Einaudi Institute for Economics and Finance | Bio/Vote History | ||
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Sergei Guriev |
Sciences Po | Bio/Vote History | ||
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Lack of impact of pessimists on prices helps creating bubbles.
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Patrick Honohan |
Trinity College Dublin | Bio/Vote History | ||
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Beata Javorcik |
University of Oxford | Bio/Vote History | ||
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Jan Pieter Krahnen |
Goethe University Frankfurt | Bio/Vote History | ||
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That's exactly the point of discussion in the Wirecard case.
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Botond Kőszegi |
Central European University | Did Not Answer | Bio/Vote History | |
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Eliana La Ferrara |
Harvard Kennedy | Did Not Answer | Bio/Vote History | |
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Christian Leuz |
Chicago Booth | Bio/Vote History | ||
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Not clear how harmful existing restrictions (e.g., lending requirements) are, but evidence suggests that temp. bans are bad idea.
-see background information here -see background information here -see background information here |
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Thierry Mayer |
Sciences-Po | Did Not Answer | Bio/Vote History | |
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Costas Meghir |
Yale | Bio/Vote History | ||
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Peter Neary |
Oxford | Did Not Answer | Bio/Vote History | |
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Marco Pagano |
Università di Napoli Federico II | Bio/Vote History | ||
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Again, there is a vast body of empirical evidence supporting this statement.
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Lubos Pastor |
Chicago Booth | Bio/Vote History | ||
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Torsten Persson |
Stockholm University | Did Not Answer | Bio/Vote History | |
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Christopher Pissarides |
London School of Economics and Political Science | Did Not Answer | Bio/Vote History | |
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Richard Portes |
London Business School | Bio/Vote History | ||
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That's obvious. But such restrictions may nevertheless be justified. Naked shorts - especially naked CDS - can endanger financial stability
-see background information here |
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Canice Prendergast |
Chicago Booth | Bio/Vote History | ||
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Carol Propper |
Imperial College London | Bio/Vote History | ||
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Imran Rasul |
University College London | Did Not Answer | Bio/Vote History | |
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Lucrezia Reichlin |
London Business School | Did Not Answer | Bio/Vote History | |
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Rafael Repullo |
CEMFI | Bio/Vote History | ||
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Hélène Rey |
London Business School | Did Not Answer | Bio/Vote History | |
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Antoinette Schoar |
MIT | Bio/Vote History | ||
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Kjetil Storesletten |
University of Minnesota | Bio/Vote History | ||
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It cuts both ways: facilitating short positions during crisis would allow more information aggregation but could also feed exuberance
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Daniel Sturm |
London School of Economics | Bio/Vote History | ||
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John Van Reenen |
LSE | Bio/Vote History | ||
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John Vickers |
Oxford | Bio/Vote History | ||
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Hans-Joachim Voth |
University of Zurich | Bio/Vote History | ||
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Karl Whelan |
University College Dublin | Did Not Answer | Bio/Vote History | |
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Charles Wyplosz |
The Graduate Institute Geneva | Bio/Vote History | ||
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Fabrizio Zilibotti |
Yale University | Did Not Answer | Bio/Vote History | |
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