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The topic I choose to research on is the effect of short selling on economy. Short selling is when an investor borrows shares of trading security fro his or her brokers, sell the stock immediately, and use the proceeds to buy back the stock at a lower price. Essentially, it is a way for investor to profit when the price of a trading security goes down. Since I am finance major, this topic is highly relevant to me an I want to know more about it. I first used Google to search for information about short selling. I used the search terms “short selling article.” Google returned a large amount of links, mostly website explaining and discuss the concept of short selling. Many popular articles about the topic showed…show more content…
The second source I found is also a popular article in the Economist called “Short-selling litigation, an enlightening mistake.” Joseph Schumpeter, who is a columnist for the Economists, wrote this article. The Schumpeter said in the article that short-selling is a mistake because people who know that a security's price will go down will do nothing to prevent it since they have the potential to profit from it. Schumpeter, is an economist so his words would be more credibility then Floyed Norris' s view point in New York Times. The third source I found is a scholarly article from the Review of Financial Studies called “Price Efficiency and Short Selling” written by two Oxford professors, Karl Sigurdsson and Pedro Saffi. Their view point is that short selling can contribute to the efficiency of the market by bring overvalued stocks and security back to their real price based on the future cash flows of their respected assets. However, they warned that speculators can potential abuse short shelling and cause a health company to collapse. I find that this article is very credible because it identified both view point and the authors of this article are experts in their fields The forth source I found is another scholar article from the Contemporary Accounting Research Journal called “The Effect of Short Selling on
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