Abstract

This Article examines a previously unstudied aspect of short selling: the risk that the shares a short seller has borrowed will be delisted and deregistered. We label such shares “zombie stocks” or “zombies,” because they appear to be “dead,” but nevertheless create financial horror for short sellers, exposing them to significant risks and costs even when the short seller has speculated correctly against a company’s shares. The central problem occurs when short sellers are unable to purchase shares to satisfy their borrowing obligations and instead become stuck paying equity loan fees and posting collateral, potentially indefinitely.

---

• Keyword(s):
• finance 266

View Publication on Journal Site