The use of short sales by mutual funds has increased significantly over the last decade. In this paper, we provide a first look at short selling by mutual funds, a phenomenon not examined by prior research. The mutual funds that use short sales do so frequently and in significant amounts,...

The short interest data reported in the United States aggregate valuation shorts (motivated by a pessimistic opinion on firm value) and arbitrage shorts (motivated by various arbitrage or hedging strategies). However, the information content of these two sources of short interest is different...

We study the behavior of short sellers around earnings restatements. We find that short sellers accumulate positions in restating firms several months in advance of the restatement and subsequently unwind these positions after the drop in share price induced by the restatement. The increase in...