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Short Sales and Corporate Investment Efficiency: Evidence from China

Author

Listed:
  • Yizhong Wu
  • Chien-Chiang Lee
  • Chi-Chuan Lee
  • Diyun Peng

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.

Suggested Citation

  • Yizhong Wu & Chien-Chiang Lee & Chi-Chuan Lee & Diyun Peng, 2022. "Short Sales and Corporate Investment Efficiency: Evidence from China," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 58(8), pages 2342-2354, June.
    • Handle: RePEc:mes:emfitr:v:58:y:2022:i:8:p:2342-2354
    DOI: 10.1080/1540496X.2021.1977122
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    Cited by:

    1. Qiumei Li & Hayat Khan & Zuominyang Zhang & Ling Lin & Ke Huang, 2022. "The Impact of the Belt and Road Initiative on Corporate Excessive Debt Mechanism: Evidence from Difference-in-Difference Equation Model," Sustainability, MDPI, vol. 15(1), pages 1-19, December.
    2. Wang, Linyu & Ji, Yifan & Ni, Zhongxin, 2023. "Spillover of stock price crash risk: Do environmental, social and governance (ESG) matter?," International Review of Financial Analysis, Elsevier, vol. 89(C).
    3. Tanveer Bagh & Abdul Waheed & Muhammad Asif Khan & Mirza Muhammad Naseer, 2023. "Effect of Economic Policy Uncertainty on China’s Stock Price Index: A Comprehensive Analysis Using Wavelet Coherence Approach," SAGE Open, , vol. 13(4), pages 21582440231, December.
    4. Wang, Chih-Wei & Lee, Chien-Chiang & Wu, Lin-Tan, 2023. "The relationship between cash flow uncertainty and extreme risk: International evidence," Pacific-Basin Finance Journal, Elsevier, vol. 77(C).

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