An Empirical Analysis Focusing on China's A-Share Listed Firms Examines how the Threat of Short-Selling Mechanisms Influences Corporate Spending on Environmental Protection Initiatives

DOI: https://doi.org/10.62517/jel.202614415

Author(s)

Jiabin Liang

Affiliation(s)

School of Finance and Economics, Guangdong Neusoft University, Foshan, Guangdong, China

Abstract

Focusing on Chinese A-share listed firms as the sample, this study empirically explores how the short-selling mechanism affects corporate environmental protection expenditure. After reviewing relevant academic studies, researchers put forward hypotheses and establish an econometric model, then conduct empirical investigations using panel data spanning from 2013 to 2022. The findings indicate that the short-selling mechanism can effectively drive firms to enhance their environmental protection expenditure, and this effect demonstrates differences across enterprises with varying ownership structures, industrial characteristics, and regional environmental regulatory intensities. Further analysis reveals that the short-selling mechanism exerts an influence on corporate environmental decision-making mainly by improving the transparency of information disclosure and strengthening market supervision. Consequently, this research not only expands the existing body of academic work in this domain but also offers practical guidance for optimizing short-selling regulations and facilitating enterprises' transition towards greener operations. The analysis focuses on several critical factors influencing the relationship between corporate environmental protection initiatives and market dynamics. These include the operational mechanism of short-selling activities, which can impose significant pressure on firms to enhance their performance. Additionally, the study examines how external regulatory forces and public scrutiny affect a company's decisions regarding environmental investments. Another key aspect is the role played by information transparency, as clear and accessible disclosure practices can influence investor perceptions and market efficiency. Finally, the impact of market supervision systems on enforcing compliance with environmental standards is also explored.

Keywords

Short-Selling Mechanisms; Corporate Environmental Protection Investment; External Governance; Capital Market Discipline; Information Transparency

References

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