A Study on the Relationship between Short-Selling Mechanisms and Corporate Green Innovation

DOI: https://doi.org/10.62517/jel.202614302

Author(s)

Tingxuan Chen

Affiliation(s)

College of Economics and Management, Taizhou University, Taizhou, Zhejiang, China

Abstract

This research investigates the effect of short selling on corporate green innovation, addressing a critical intersection between capital market reform and environmental sustainability. Mechanism analysis shows that short selling primarily operates through intensified managerial short-sightedness,, while the quality effect remains insignificant across all subsamples. Further analysis reveals that firms with environmentally experienced CEOs and higher management ownership can partially mitigate the short selling increases green innovation quantity,while the quality effect is insignificant in the baseline model associated with short-selling pressure. This research leads to the literature by uncovering the nuanced relation between capital market mechanisms and corporate green behavior, and offers policy implications for designing complementary governance mechanisms that align short-term market discipline with long-term environmental sustainability.

Keywords

Short Selling; Green Innovation; Innovation Quality; Margin Trading Program; Difference-in-Differences

References

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