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The Folly of Demonizing Short-Selling

Jan. 2009

by Sadakazu Osaki

Japan has imposed stricter restrictions on short-selling in the aim of stemming the equity market’s decline. However, even with such restrictions, equity prices have no prospect of rising unless the consensus economic and corporate earnings outlook improves. Moreover, short-selling restrictions pose a risk of diminishing liquidity and impairing the market’s price formation mechanism.

*Organization names and job titles are current as of the publishing dates

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Author's Profile

Sadakazu Osaki

Head of Research,
Center for Strategic Management and Innovation