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SHORT SALES AND SHAREHOLDERS' UNANIMITY

Bottazzi, J-M, Pascoa, M and Ramírez, G (2016) SHORT SALES AND SHAREHOLDERS' UNANIMITY [Working Paper]

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Abstract

Short sales collided with Makowski’s (1983) view that shareholders’ unanimity follows from the competitiveness of the firm in the stock market. However, once short sales are properly modelled, requiring the shares to be borrowed beforehand, unanimity can be restored. Short sales are no longer an externality and have a price: the lending fee. Unanimity prevails under perfectly elastic demands by both shareholders and shareborrowers. This requires the firm’s shares not to be on special. Stock prices reflect the evaluation by shareholders who did not entirely encumber their shares or shareborrowers who did not fully re-use the shares that they possess.

Item Type: Working Paper
Subjects : subj_Economics
Divisions : Faculty of Arts and Social Sciences > School of Economics
Authors :
AuthorsEmailORCID
Bottazzi, J-MUNSPECIFIEDUNSPECIFIED
Pascoa, MUNSPECIFIEDUNSPECIFIED
Ramírez, GUNSPECIFIEDUNSPECIFIED
Date : 2016
Related URLs :
Depositing User : Symplectic Elements
Date Deposited : 18 May 2016 13:34
Last Modified : 18 May 2016 13:41
URI: http://epubs.surrey.ac.uk/id/eprint/810751

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