Can Short Selling Mechanisms Suppress the Risk of Corporate Stock Price Collapse?

DOI: https://doi.org/10.62517/jbm.202609211

Author(s)

Ningyang Sun

Affiliation(s)

Northeast Forestry University, Harbin, Heilongjiang, China

Abstract

Short selling mechanisms reduce the probability of concentrated stock price crashes by releasing negative information in advance. By analyzing its price discovery logic and the causes of crash risk, a multiple regression model is constructed using Luckin Coffee as a sample to test the inhibitory effect of short selling mechanisms on negative return skewness. It is found that the risk of crashes converges significantly within the event window. Based on this, three progressive paths are proposed: optimizing disclosure, strengthening supervision, and hedging tools. It is expected to provide institutional reference for risk prevention and control in the capital market.

Keywords

Short Selling Mechanism; Stock Price Collapse Risk; Luckin Coffee; Information Disclosure; Risk Hedging

References

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