Was short selling embraced by participants in an emerging market during the COVID-19 pandemic?

Kar Hoong Chan (), Lee Ying Tay (), Tuan Hock Ng (), Elsadig Ahmed, Azlan Amran () and Kin-Boon Tang ()

Asian Economic and Financial Review, 2023, vol. 13, issue 10, 677-686

Abstract: The COVID-19 pandemic has put the financial system under considerable strain and triggered an unprecedented reaction in the financial market. To promote financial stability and strengthen the Malaysian financial market, the authorities banned regulated short selling activities in March 2020 and subsequently lifted the ban in January 2021. This study objectively examines the stock price reactions toward regulated short selling activities announcements and documents the most recent empirical study which examines the short selling related announcements in the emerging market. There are differing opinions on stock price reactions regarding short selling announcements, so to examine the stock price reactions, the event study methodology was employed. The event window for this study is -15 days, 0 (announcement day), +15 days. Interestingly, the findings showed that the stock prices responded negatively to the ban of regulated short selling activities and responded positively to the removal of the ban. This study supports the downward biased hypothesis which implies that the Malaysian market participants welcome regulated short selling activities.

Keywords: COVID-19 pandemic; Downward biased hypothesis; Event study methodology; Malaysian financial market; Regulated short selling announcements. (search for similar items in EconPapers)
Date: 2023
References: Add references at CitEc
Citations:

Downloads: (external link)
https://archive.aessweb.com/index.php/5002/article/view/4847/7708 (application/pdf)
https://archive.aessweb.com/index.php/5002/article/view/4847/7770 (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:asi:aeafrj:v:13:y:2023:i:10:p:677-686:id:4847

Access Statistics for this article

More articles in Asian Economic and Financial Review from Asian Economic and Social Society
Bibliographic data for series maintained by Robert Allen ().