Can Short Selling Improve Corporate Investor Protection? ： A Case Study of CITIC Securities
DOI:
https://doi.org/10.61173/9j8rwk29Keywords:
Short-selling Mechanism, Investor Protec-tion, CITIC Securities, Legal SupervisionAbstract
This paper takes the "Huge Loss Gate" incident of CITIC Securities as the research object, and explores the impact of the short-selling mechanism on corporate investor protection by combining the practice of short selling through margin trading in China. The study finds that in a weak legal risk environment, although margin selling theoretically has a price discovery function, the spread of false negative information leads to abnormal stock price fluctuations, and the imbalance between short-selling profits and violation costs weakens investor protection. The study indicates that improving the legal supervision system and strengthening information disclosure constraints are prerequisites for the short-selling mechanism to enhance investor protection.
References
[1] La Porta, R., López-de-Silanes, F., Shleifer, A., & Vishny, R. (1998). Law and finance. Journal of Political Economy, 106(6), 1113–1155.
[2] Battalio, R., Mehran, H., & Schultz, P. (2012). Short selling, market efficiency, and stock prices. Journal of Financial Economics, 104(3), 668–682.
[3] Fang, L., & Peress, J. (2009). Media coverage and the crosssection of stock returns. Journal of Finance, 64(5), 2023–2052.
[4] Coffee, J. C. (2007). Class action versus mass arbitration: The anti-investor revolution in the courts. Stanford Law Review, 59(3), 865–963.
[5] Cai, J., & Zhu, X. (2009). The dark side of short-selling: Evidence from China. Journal of Financial Intermediation, 18(3), Dean&Francis Yue Yang 383–406.
[6] Bris, A., Goetzmann, W. N., & Zhu, N. (2007). Efficiency and the bear: Short sales and markets around the world. Journal of Finance, 62(3), 1029–1079.
[7] Aktas, N., Declerck, G., & Decreusefond, V. (2016). Shortselling, legal institutions, and stock price efficiency: Evidence from India. Journal of International Money and Finance, 63, 130–154.
[8] Fama, E. F., Fisher, L., Jensen, M. C., & Roll, R. (1969). The adjustment of stock prices to new information. International Economic Review, 10(1), 1–21.
[9] Coffee, J. C. (2007). Class action versus mass arbitration: The anti-investor revolution in the courts. Stanford Law Review, 59(3), 865–963.
Downloads
Published
Issue
Section
License
Copyright (c) 2025 by the authors.
This work is licensed under a Creative Commons Attribution 4.0 International License.
