The Short Selling System Improve the Quality of Corporate Disclosure?
With the rollout of margin trading and short-selling regulations in China's capital market around 2010, this paper applies a two-step DID framework to analyze how short-selling activities affect the quality of firms' information disclosure. The study finds that the liberalization of short-selling mechanisms leads to a significant delay in the disclosure of annual reports, particularly among non-state-owned enterprises and those with poor internal controls. Further analysis indicates that while short-selling mechanisms affect the timeliness of annual report disclosure, they simultaneously enhance the reliability of accounting information. The results suggest that the relaxation of short-selling regulations implies higher requirements for the reliability of accounting information, thereby increasing corporate prudence in information disclosure and leading to a strategic delay in the release of annual reports.
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