 The Effects of Short Interest on the Likelihood of Short SqueezeDominik Svoboda (), Svatopluk Kapounek and Peter Albrecht () No 2025-104, MENDELU Working Papers in Business and Economics from Mendel University in Brno, Faculty of Business and Economics Abstract: Our paper investigates the determinants of short squeeze occurrences, a market anomaly wherein rapid price increases force short sellers to cover their positions, amplifying upward momentum. We focus on the predictive role of short interest, investor attention, and institutional ownership, employing rare-event logistic regression to address the infrequency of these events. Our results show that elevated short interest and spikes in investor attention significantly increase the likelihood of a short squeeze, while institutional ownership has a stabilizing effect. These findings suggest that short squeezes are not random episodes but can be systematically anticipated based on observable market signals. The study offers practical implications for traders, risk managers, and regulators seeking to better understand and monitor the conditions under which short squeezes are likely to occur. Keywords: squeeze effect; rare-logit; short interest; investor attention (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:men:wpaper:104_2025 Access Statistics for this paper More papers in MENDELU Working Papers in Business and Economics from Mendel University in Brno, Faculty of Business and Economics Contact information at EDIRC. |
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