Does short selling affect corporate green transformation? —Evidence from China

Deshuai Hou, Qi Wang, Qiong Sun and Ying Chen

Research in International Business and Finance, 2025, vol. 76, issue C

Abstract: This study examines the impact of short selling on corporate green transformation. The findings suggest that short selling significantly hinders this transformation. The mechanism analysis demonstrates that short selling mainly hinders corporate green transformation by aggravating managerial short-sightedness, lowering corporate green innovation quality, misallocating green resources, and reducing the investment of green investors. Further analysis reveals that the negative impact of short selling is more pronounced in firms with higher internal and external pressures, and poorer information quality. Extended research identifies firm-specific limitations emerge as key factors constraining the role of short selling. In addition, CEOs with environmental experience and increased management shareholding can effectively mitigate the negative impact of short selling on corporate green transformation. This study enriches the literature on short-selling and low-carbon transformation of market micro-entities. It also provides empirical evidence that addresses the bottlenecks in corporate green transformation and policy formulation in the context of ecological civilization construction.

Keywords: Short selling; Corporate green transformation; Short-sighted behavior; Capital market pressure; Information quality (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:riibaf:v:76:y:2025:i:c:s0275531925000571

DOI: 10.1016/j.ribaf.2025.102801

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