Short selling and labor investment efficiency: evidence from the Chinese stock market
Exploring the staggered short sale deregulation on the Chinese stock market as quasi‐exogenous shocks, we find that the introduction of short selling is associated with higher deviations of labor investment from the level justified by economic fundamentals, i.e., lower labor investment efficiency. T...
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Published in | Accounting and finance (Parkville) Vol. 61; no. S1; pp. 2451 - 2476 |
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Main Authors | , , |
Format | Journal Article |
Language | English |
Published |
Clayton
Wiley Subscription Services, Inc
01.04.2021
Blackwell Publishing Ltd |
Subjects | |
Online Access | Get full text |
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Summary: | Exploring the staggered short sale deregulation on the Chinese stock market as quasi‐exogenous shocks, we find that the introduction of short selling is associated with higher deviations of labor investment from the level justified by economic fundamentals, i.e., lower labor investment efficiency. The main effect is more pronounced for firms that are more opaque, younger, and worse governed. Further evidence indicates that short sale deregulation mainly induces firms to overinvest in labor. Our overall findings suggest that faced with downward price pressures, firms may overinvest in labor to convey favorable information to stakeholders, resulting in less efficient labor investments. |
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Bibliography: | Ding acknowledges financial support from National Social Science Fund of China [17ZDA037], the Humanities and Social Science Fund of the Ministry of Education [18YJC790024], National Statistical Science Research Project [2018LY46], Natural Science Fund for Colleges and Universities in Jiangsu Province [18KJB620001], Innovation Team Development Project of the Ministry of Education [IRT_17R52]. Ni acknowledges financial support from National Social Science Fund of China [71802170] and the Key Laboratory of Econometrics (Xiamen University), Ministry of Education. Xu acknowledges financial support from National Natural Science Foundation of China [71802113]. The authors contributed equally to this paper. All errors are our own. |
ISSN: | 0810-5391 1467-629X |
DOI: | 10.1111/acfi.12671 |