| Article ID: | iaor201522754 |
| Volume: | 7 |
| Issue: | 1 |
| Start Page Number: | 1 |
| End Page Number: | 16 |
| Publication Date: | Mar 1984 |
| Journal: | Journal of Financial Research |
| Authors: | Peterson David R, Waldman Donald M |
| Keywords: | investment, decision, information |
This study examines the role of heterogeneous expectations as a determinant of short selling of common stock. A theoretical model demonstrates that the degree of heterogeneity of opinion and the number of investors in a market both positively influence short selling. This theory is substantiated empirically using ex‐ante data. Short selling is related directly to merger activity and the presence of options.