Releasing Short Selling Regulation and Corporate R&D Manipulation: A Quasi-Natural Experiment Based on Margin Trading System

Abstract

Abstract: In 2010, the China Securities Regulatory Commission introduced the short selling mechanism into the capital market. So, will the short selling mechanism affect the R&D manipulation behavior of enterprises? Taking A-share listed companies in Shanghai and Shenzhen from 2007 to 2022 as the research objects, this paper makes use of a multi period DID model to examine the impact of short selling mechanism on corporate R&D manipulation behavior. The findings show that the short selling mechanism can effectively suppress the R&D manipulation behavior of enterprises. The mechanism analysis reveals that short selling mechanisms can improve the governance levels of companies and reduce the degree of information asymmetry between internal and external factors, thus the short selling mechanism can inhibit the R&D manipulation behaviors of enterprises. The heterogeneity analysis reveals that the inhibitory effect of short selling mechanism on corporate R&D manipulation is more significant in highly competitive industries, regions with lower levels of rule of law, enterprises with greater financing constraints, and enterprises with higher internal quality control. The economic consequence analysis reveals that the short selling mechanism has suppressed the R&D manipulation behavior of enterprises, thus the short selling mechanism can improve the innovation ability of enterprises. To this end, it is necessary to further improve laws and regulations and enhance the governance of corporate R&D manipulation behaviors.

Key words: short-selling mechanism, R&D manipulation, governance level, information asymmetry

CLC Number:

F275.5

LI Xue-feng, CAI Xin-yi. Releasing Short Selling Regulation and Corporate R&D Manipulation: A Quasi-Natural Experiment Based on Margin Trading System[J]. Contemporary Finance & Economics, 2024, 0(7): 140-151.

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