Predatory Short Sales and Bailouts

Konferenzbeitrag

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 predatory short sales by an uninformed investor, which can trigger the inefficient liquidation of a firm. We obtain several novel results: A goverment 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.

Angaben zum Objekt

• Sprache: Englisch

Verweise und Beziehungen

• Erschienen in: Series: Beiträge zur Jahrestagung des Vereins für Socialpolitik 2015: Ökonomische Entwicklung - Theorie und Politik - Session: Financial Economics V ; No. E10-V3

Klassifikation und Themen

• Klassifikation: Wirtschaft ; Corporate Finance and Governance: Government Policy and Regulation ; General Equilibrium and Disequilibrium: Financial Markets ; General Financial Markets: General (includes Measurement and Data)

Beteiligte, Orts- und Zeitangaben

• Ereignis: Geistige Schöpfung
• (wer): Posch, Peter N. ; Löffler, Gunter ; Kranz, Sebastian
• Ereignis: Veröffentlichung
• (wann): 2015

Weitere Informationen

• Handle: http://hdl.handle.net/10419/114734
• Letzte Aktualisierung: 20.09.2024, 08:21 MESZ