The Journal of Real Estate Finance and Economics

, Volume 49, Issue 4, pp 454–476

Naked Short Selling and the Market Impact of Fails-to-Deliver: Evidence from the Trading of Real Estate Investment Trusts


    • College of Business AdministrationUniversity of Texas—El Paso
  • Thomas McInish
    • Fogelman College of Business and EconomicsUniversity of Memphis
  • Michael McKenzie
    • Faculty of Economics and BusinessUniversity of Sydney
  • James Upson
    • College of Business AdministrationUniversity of Texas—El Paso

DOI: 10.1007/s11146-013-9438-8

Cite this article as:
Devos, E., McInish, T., McKenzie, M. et al. J Real Estate Finan Econ (2014) 49: 454. doi:10.1007/s11146-013-9438-8


Naked short selling and purposeful fails-to-deliver have been identified in the popular press and by the SEC as contributing factors to the stock market decline in 2008. We investigate the market impact of the announcement that fails-to-deliver have occurred for a sample of real estate investment trusts (REITs). We find little evidence that this announcement affects returns or has any market manipulation ability. We find that fails-to-deliver are most consistent with a 1 to 3 days delivery difference between the short sale and offsetting covering trades. These results hold independent of the type of REIT (equity or mortgage REITs). Overall, our findings suggest that naked short selling and purposeful fails-to-deliver may not have contributed much to REIT losses during the financial crisis.


Short SellingFails-to-deliverFinancial CrisisRegulationREITs

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© Springer Science+Business Media New York 2013