Short Sales and Corporate Investment Efficiency: Evidence from China

Yizhong Wu, Chien-Chiang Lee (), Chi-Chuan Lee and Diyun Peng

Emerging Markets Finance and Trade, 2022, vol. 58, issue 8, 2342-2354

Abstract: This research assesses the effect of short sales on investment efficiency in China by applying the DID method. Results show that short sales can improve investment efficiency and that the effect is more pronounced for companies with low information transparency, low governance capacity, low audit quality, and high management performance pressure. Evidence reveals that the impact of short sales varies under different market sentiments. Our findings support the beneficial role of short sales on the information and governance environment. Governments and investors can thus pay more attention to short sales, as they help in their role of accelerating information dissemination.

Date: 2022
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DOI: 10.1080/1540496X.2021.1977122

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