Guan Kai^*

Business School, Jiangxi Institute of Fashion Technology

Abstract：

Based on a quasi-natural experiment of the step-by-step expansion of margin trading and short selling in China, this paper uses the difference-in-differences model to investigate the impact of short selling mechanism on corporate violations. Heterogeneity analysis reveals that in samples with lower marketization and weaker tax enforcement, this inhibitory effect proves more pronounced. Non-state-owned enterprises have greater management power and the samples are also significant. The conclusion of this paper confirms that short sale, as an external governance mechanism, can effectively restrain corporate violations. Improving the capital market system helps to improve the information quality of compliance level of listed companies.

Key Words：

short sale mechanism; violations by enterprises; difference in differences; external governance