Recent theoretical work suggests that short sellers can manipulate firms into making suboptimal investment decisions. In this study, I empirically test whether short sellers improve or harm the efficiency of firms' capital investment. Overall, I show that short selling improves the efficiency of...

Informed investors have been shown to break up their larger trades into smaller trades in order to disguise their information. This study considers informed trading strategies when investors face borrowing constraints. Borrowing constraints may induce more intense trading and increase the use of...