Short-Selling as a Market Discipline Mechanism: A Survey of Academic Literature | ||||
| المجلة العلمية للدراسات والبحوث المالية والتجارية | ||||
| Volume 6, Issue 2 - Serial Number 1, July 2025, Page 1149-1197 PDF (1.4 MB) | ||||
| Document Type: المقالة الأصلية | ||||
| DOI: 10.21608/cfdj.2025.400396.2310 | ||||
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| Authors | ||||
Dalia Adel Abas1; Hanan Hassan Gad Allah2; Hadeer Salama Gad Gouda  3
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| 1إدارة جامعة دمياط، كلية التجارة، جامعة دمياط، دمياط، دمياط | ||||
| 2کلية التجارة - جامعة دمياط - قسم المحاسبة | ||||
| 3كلية التجارة - جامعة دمياط - دمياط الجديدة | ||||
| Abstract | ||||
| This paper presents a comprehensive review of the theoretical and empirical literature on short-selling, with a focus on its mechanisms, informational dynamics, and implications for corporate behavior. We begin by examining the theoretical foundations of short-selling, including its mechanics and the strategic role of short-sellers in financial markets. The review further explores the concept of information superiority among short-sellers, the key determinants influencing short-selling activity, and the various metrics used to capture and analyze such activity. We then synthesize existing evidence on the impact of short-selling threats on corporate governance structures—both internal (e.g., board composition, executive compensation) and external (e.g., external auditors, financial analysts). In addition, we assess how the presence of short-sellers affects corporate financial reporting transparency through its components, particularly reporting quality, private information acquisition, and the information dissemination. Finally, we extend the discussion to the broader consequences of short-selling pressure on corporate performance, encompassing both financial and non-financial dimensions such as environmental and social responsibility. Based on the reviewed literature, we identify several gaps and propose future research directions aimed at deepening our understanding of the role of short-sellers as market disciplinarians and potential sources of pricing pressure, and their overall influence on capital market efficiency and corporate decision-making. | ||||
| Keywords | ||||
| Short-selling; Disciplining hypothesis; Price pressure hypothesis; Financial reporting transparency; Firm performance | ||||
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