Do Margin Trading and Short Selling Improve the Completion Rate of Performance Commitment?
Using data of China's listed companies that announce performance commitment from year 2011 to year 2021,this paper investigates the impact of margin trading and short selling program on the completion rate of performance commitment.We find that the completion rate of performance commitment signed by margin trading and short selling target companies is lower compared to non-target companies,and this negative impact is mainly caused by margin trading transactions.Mechanism analysis shows that margin trading and short selling program decreases the completion rate of perform-ance commitment by intensifying managerial myopia and reducing the shareholding of institutional investors.Further analysis shows that the negative impact of margin trading and short selling program is more pronounced in companies with poor information environment,non-state-owned companies as well as companies in less competitive industries.The conclusion shows that the threat effect of short selling does not work since the asymmetry between margin trading and short selling is severe in China.On the contrary,the leverage effect of margin trading stimulates firms to pursue high stock price by announcing impractical performance commitment,which leads to the breach of contract when performance commitment expires.The results of this paper provide theo-retical and practical evidences for improving China's margin trading and short selling program and performance commitment mechanism.
NETL
NSTL
万方数据
