Margin trading, short selling and corporate green innovation

Abstract

This paper uses the panel data of Chinese listed companies from 2007 to 2019, uses the relaxation of China's margin trading and short selling restrictions as the basis of quasi experimental research, and then constructs a double difference model to analyze whether the margin trading and short selling will encourage enterprises to engage in green technology innovation activities. Firstly, our research results show that after the implementation of the margin trading and short selling, the green technology innovation behavior of pilot companies will increase significantly. We believe that the short selling threat and pressure brought by short selling to enterprises are the main reasons for pilot enterprises to engage in green technology innovation. Secondly, the empirical results show that the implementation of margin trading and short selling will significantly promote the quantity of green technology innovation of pilot enterprises, but will not significantly promote the quality of green technology innovation of pilot enterprises. Furthermore, we analyze the difference of the impact of margin trading and short selling on the quantity of green technology innovation of pilot enterprises in different periods. Finally, we find that the performance decline, yield gap between financial assets and operating assets, the risk of stock price crash, management shareholding, institutional shareholding ratio, product market competition, short selling intensity, margin trading intensity and formal environmental regulation intensity will affect the role of policy in promoting green technology innovation of pilot enterprises.