Agreed. In many cases, short sellers do a better job of identifying, researching, and flagging illegal behavior than government agencies charged with enforcing the rules.
Its also true of long investors: they also do a better job of identifying, researching and flagging top-performing companies than government agencies charged with the task.
The key thing is, motivation. Both long and short investors have motivations to cull the herd.
The key thing is, motivation. Both long and short investors have motivations to cull the herd.