Spillover effects of short selling on corporate bond financing costs: Evidence from Chinese listed firms

Xianzhe Jin, Haitao Si, Dandan Zhu and Yuyan Li

Emerging Markets Review, 2025, vol. 66, issue C

Abstract: This study examines the impact of short selling on corporate bond financing costs. Using a quasi-natural experiment and panel data from Chinese A-share listed companies from 2007 to 2022, we find that short selling significantly reduces corporate bond financing costs, primarily by mitigating information asymmetry. Further analysis reveals that this effect is particularly pronounced in regions with well-developed financial markets and strong legal environments. Our findings remain robust after controlling for potential confounders and addressing endogeneity through propensity score matched difference-in-differences (PSM-DID) analysis. This study provides a novel perspective on short selling in China, highlighting its cross-market spillover effects between equity and bond markets.

Keywords: Short selling; Market spillover effect; Corporate bond financing costs; PSM-DID; Information asymmetry (search for similar items in EconPapers)
JEL-codes: D49 G12 G14 G31 (search for similar items in EconPapers)
Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S1566014125000342
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:ememar:v:66:y:2025:i:c:s1566014125000342

DOI: 10.1016/j.ememar.2025.101285

Access Statistics for this article

Emerging Markets Review is currently edited by Jonathan A. Batten

More articles in Emerging Markets Review from Elsevier
Bibliographic data for series maintained by Catherine Liu ().