Purpose – The purpose of this paper is to investigate the extent to which introduction of ETFs reduces short-sale constraints in their constituent stocks. Design/methodology/approach – First, the introduction of ETFs increases short interest for stocks that they hold. Second, the increase in...

Purpose – The purpose of this paper is to investigate the extent to which introduction of ETFs reduces short‐sale constraints in their constituent stocks. Design/methodology/approach – First, the introduction of ETFs increases short interest for stocks that they hold. Second, the increase...