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Short selling constraints and politically motivated negative information suppression


Deng, W and Jiang, C and Young, D, Short selling constraints and politically motivated negative information suppression, Journal of Corporate Finance, 68, (31 March 2021) Article 101943. ISSN 0929-1199 (2021) [Refereed Article]

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Copyright 2021 Elsevier B.V. All rights reserved.

DOI: doi:10.1016/j.jcorpfin.2021.101943


This study examines the effect of short selling constraints on politically motivated suppression of negative information. We use a unique setting in China, in which there are multiple exogenous changes in short selling constraints and firms have strong incentives to suppress negative information during politically sensitive periods. Results from Difference-in-Differences analyses and a regression discontinuity design show that removing short selling constraints can reduce politically motivated bad news suppression. Short selling can reduce negative information suppression through the channel of improved financial reporting quality, more managementís voluntary disclosure, and mediaís more timely release of information. In addition, the effect of short selling on reducing bad news hoarding is more pronounced for more politically sensitive meetings and for state-owned firms located in regions with weaker market and institutional development.

Item Details

Item Type:Refereed Article
Keywords:short selling constraints, negative information suppression, political pressures, information environment
Research Division:Commerce, Management, Tourism and Services
Research Group:Banking, finance and investment
Research Field:Finance
Objective Division:Commercial Services and Tourism
Objective Group:Financial services
Objective Field:Finance services
UTAS Author:Deng, W (Dr Xiaohu Deng)
ID Code:143836
Year Published:2021
Deposited By:Economics and Finance
Deposited On:2021-04-07
Last Modified:2022-01-11

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