We examine the economic determinants of short-sale supply, and its consequences for future stock returns. Lendable supply increases with expected borrowing costs and decreases with financial statement constructs that indicate overvaluation. Although rising loan fees help ease supply, we find...

In the literature short sellers are often considered to be informed investors. By accessing a data set of disclosed large European short selling positions with the data of the increase and decrease of positions I model the returns of the short sellers. I find no significant alpha returns in...