The Impact of Short-Selling Mechanisms on Corporate Tax Avoidance: Evidence from China_Vol. 3 No. 3 (JSE 2026)_Journal of Statistics and Economics (ISSN: 3005-5733)

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The Impact of Short-Selling Mechanisms on Corporate Tax Avoidance: Evidence from China

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DOI: https://doi.org/10.62517/jse.202611304

Author(s)

Luyuan Liao

Affiliation(s)

Yibin University, Yibin, Sichuan, China

Abstract

The concept of short selling, being a mainstream capital market mechanism, has attracted increased publicity concerning the role of its external governance. Based on the staggered expansion of margin trading and short-selling program of China, which serves as a kind of quasi-natural experiment, this paper investigates a set of 2008 to 2024 A-share listed companies by utilizing a staggered difference-in-differences (DID) design. We conclude that short sales substantially reduce corporate tax avoidance, a finding that holds under various robustness tests that stands strong to testing. According to the mechanism tests, better information disclosure, increased concentration of ownership and better asset turnover are some of the major channels. Heterogeneity analysis indicates more impacts in government owned businesses and big companies as well as those with increased institutional ownership. This paper offers some new facts about the role of short-selling mechanisms in governance.

Keywords

Short-Selling Mechanism; Margin Trading And Short Selling; Corporate Tax Avoidance; External Governance; Difference-In-Differences

References

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