1. Are Short Sellers Positive Feedback Traders? Discussion A.G. Malliaris, Quinlan School of Business Loyola University Chicago Multinational Finance Conference, Krakow, June 24-27, 2012

2. Background Role of Short Sellers: Do they stabilize or destabilize markets? Are Short Sellers Smart? Fundamentalists? How Should Regulators Respond?

3. Purpose of this Paper Investigate Short Selling Regimes During the Global Financial Crisis Why is this Interesting? What is the Role of the Crisis? Regulators imposed bans on Short Sales This Allows to test the impact of such bans: did the bans stabilize or not the markets?

4. Methodology One equation model with Fundamental traders and Feedback traders Introduce a Dummy variable equal to 1 is short sales are restricted and 0 otherwise. Examine feedback trading Examine Conditional Variance Nice sample of daily data of financial firms in 6 countries

5. Results and Comments Bans of Short Selling are Ineffective, i.e. bans do not stabilize markets C1: What about individual differences among US, UK, Germany vs. France, S. Korea and Australia? C2: How to control for the magnitude of short selling? C3: As always we have joint testing: Market efficiency during a crisis?

6. Comments C4: During a crisis with a ban on some sector how options and futures markets behave? C5: If Short sellers are fundamentalist and restricted what other strategies do they follow? C6: Can we claim that banned short sellers do not act as feedback technical traders? C7: Nice paper that challenges us to develop a comprehensive hypothesis about short selling