TY - JOUR

T1 - To short or not to short? Improving morality judgments of short trades and short traders

AU - Chatterjee, Subimal

AU - Dalman, M. Deniz

AU - Mookherjee, Satadruta

N1 - Chatterjee, S. To short or not to short? Improving morality judgments of short trades and short traders / S. Chatterjee, M. D. Dalman, S. Mookherjee // Journal of Business Research. - 2020. - Volume 114. - P. 173-185. Publisher Copyright: © 2020 Elsevier Inc. Copyright: Copyright 2020 Elsevier B.V., All rights reserved.

PY - 2020/6

Y1 - 2020/6

N2 - Consumers often judge short trading that profit when asset prices fall to be less moral than long trading that profit when asset prices rise. In this research, we show that the relatively lower moral judgments of short trades/traders make consumers favor long instruments over short instruments as their investment vehicle of choice. However, we can make short instruments appear as attractive as long instruments by incorporating an economic argument and a moral argument for short trades, i.e., short trades make markets efficient by revealing the true worth of an asset and thereby protect consumers from higher prices. We find that neither the economic nor the moral argument, by themselves, can make short trades morally equivalent to long trades. The results imply that financial organizations need a core moral justification to validate the efficiency/rationality of their practices if they wish to respond to public pressures demanding ethical behavior.

AB - Consumers often judge short trading that profit when asset prices fall to be less moral than long trading that profit when asset prices rise. In this research, we show that the relatively lower moral judgments of short trades/traders make consumers favor long instruments over short instruments as their investment vehicle of choice. However, we can make short instruments appear as attractive as long instruments by incorporating an economic argument and a moral argument for short trades, i.e., short trades make markets efficient by revealing the true worth of an asset and thereby protect consumers from higher prices. We find that neither the economic nor the moral argument, by themselves, can make short trades morally equivalent to long trades. The results imply that financial organizations need a core moral justification to validate the efficiency/rationality of their practices if they wish to respond to public pressures demanding ethical behavior.

KW - Market efficiency

KW - Moral judgments

KW - Morality-efficiency tradeoff

KW - Short/long trades

KW - SCOPUS

UR - http://www.scopus.com/inward/record.url?scp=85083301977&partnerID=8YFLogxK

U2 - 10.1016/j.jbusres.2020.04.011

DO - 10.1016/j.jbusres.2020.04.011

M3 - Article

AN - SCOPUS:85083301977

VL - 114

SP - 173

EP - 185

JO - Journal of Business Research

JF - Journal of Business Research

SN - 0148-2963

ER -