Research on the Impact of Margin Trading on Corporate Investment Efficiency

Hui Zhang () and Xuemeng Guo ()
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Hui Zhang: Beijing Jiaotong University
Xuemeng Guo: Beijing Jiaotong University

A chapter in IEIS 2020, 2021, pp 235-250 from Springer

Abstract: Abstract This paper examines the impact of margin trading on corporate investment efficiency by using the difference-in-differences model. First, I examine whether margin trading can improve corporate investment efficiency. Second, I investigate whether information transparency and agency costs are mediating factors for margin trading to improve the corporate investment efficiency. The results indicate that margin trading can improve corporate investment efficiency, and its motivation comes from the short selling effect of securities lending trading. In addition, information transparency and agency costs play an intermediary role for margin trading in improving corporate investment efficiency. Further examination found that the effect of margin trading on improving investment efficiency is more obvious in firms with weak governance mechanism, which indicates that margin trading has an external governance role. The results in this paper have certain reference significance for the security regulatory authorities, firms, and investors.

Keywords: Margin trading; Investment efficiency; Information transparency; Agency costs (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:spr:sprchp:978-981-33-4363-4_18

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DOI: 10.1007/978-981-33-4363-4_18

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