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Broker and institutional investor short selling

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Listed:
  • Ben R. Marshall
  • Nhut H. Nguyen
  • Nuttawat Visaltanachoti
  • Jennifer Zhu

Abstract

Brokers have access to order‐flow data, which they can use to enhance their short‐selling returns. However, New Zealand brokers also have a fiduciary duty to place their clients' interests before their own. We compare the short‐selling returns and trading behaviours of brokers and institutional investors who predominantly focus on profit‐making. Our results show no significant return difference between broker and institutional short sales and indicate that broker short sales are apparently to stabilise the market. Short selling is associated with improved market quality, and this improvement is more pronounced when brokers short sell more than institutional investors.

Suggested Citation

  • Ben R. Marshall & Nhut H. Nguyen & Nuttawat Visaltanachoti & Jennifer Zhu, 2025. "Broker and institutional investor short selling," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 65(1), pages 621-645, March.
    • Handle: RePEc:bla:acctfi:v:65:y:2025:i:1:p:621-645
    DOI: 10.1111/acfi.13339
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