Short selling has the potential to improve the efficiency and fairness of equity markets. Yet institutional investors face both private and regulatory constraints to short selling. We document these obstacles and consider the potential benefits of removing them. We advocate that institutional investors engage in more short selling as part of overall net-long equity strategies, such as a leveraged passive equity index combined with an actively managed short position of a size comparable to the amount of leverage.
Peter Molk & Frank Partnoy, Institutional Investors As Short Sellers?, 99 B.U. L. Rev. 837 (2019)