Share repurchases and short selling



This project examines the interplay between share repurchases and short sales. Extant literature suggests that both share repurchases and short sales drive stock prices towards fundamental values, which implies that either firms or short sellers should be active in the market of a stock at a given point in time. However, empirical evidence suggests that stock repurchases and short selling are positively related. We scrutinize this empirical observation by attempting to identify causality and examining the long-run performance of firms where both share repurchases and short sales are high.