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Short Selling's Effect on Corporate Digital Transformation

In: Proceedings of the 2025 10th International Conference on Financial Innovation and Economic Development (ICFIED 2025)

Author

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  • Zhaoqun Chen

    (City University of Hong Kong, College of Business)

Abstract

As a critical market regulation tool, the short selling mechanism exerts a notable influence on corporate digital transformation. This paper empirically examines the impact and mechanisms of short selling on digital transformation by analyzing data from A-share companies listed on the Shanghai and Shenzhen stock exchanges between 2007 and 2022. The findings reveal a significant positive correlation between short selling and corporate digital transformation. Heterogeneity tests further demonstrate that this relationship varies markedly with different levels of digital maturity within enterprises. The study also explores mediating mechanisms, indicating that short selling facilitates digital transformation by enhancing corporate governance and equity structure. Furthermore, core human capital emerges as a vital factor in leveraging the positive effects of short selling. Consequently, enterprises should prioritize investment in human capital to attract high-quality talent and cultivate a management team with superior decision-making capabilities. This strategic focus on human capital is crucial, alongside technological factors, for listed companies aspiring to achieve their digital transformation objectives.

Suggested Citation

  • Zhaoqun Chen, 2025. "Short Selling's Effect on Corporate Digital Transformation," Advances in Economics, Business and Management Research, in: Maizaitulaidawati Md Husin & Tomoki Fujii & Xiaodong Lai & Azlina Binti Md Yassin (ed.), Proceedings of the 2025 10th International Conference on Financial Innovation and Economic Development (ICFIED 2025), pages 82-97, Springer.
    • Handle: RePEc:spr:advbcp:978-94-6463-702-1_9
    DOI: 10.2991/978-94-6463-702-1_9
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