Margin Trading,Short Selling And R&D Manipulation

Research on R&D manipulation is a hot topic in the field of corporate finance.One of the reasons that enterprises have R&D manipulation conduct is Information asymmetry between government and enterprises under selective industrial policies.As the identifying party,due to the existence of information asymmetry between the government and enterprises,the government also unable to identify the good enterprises effectively,resulting in the inefficient use of resources.On March 31,2010,China’s securities market formally launched margin trading business,allowing investors to short-sell some stocks,unilateral market officially ended.The information governance function of margin trading and short selling has become a hot research topic among scholars.Some scholars have proved that margin trading and short selling can accelerate the stock price to absorb negative news and ease the information asymmetry,improve the external corporate governance environment.At the same time,it can supervise managers,improving the quality of internal control of the enterprises.Margin lending and short selling has been enlarged 7 times from 2010 to 2022.The stocks that our country allows to be short selling have been enlarged from 79 in 2010 to more than 2200 in 2022.We use Logit model and multi-period DID model in this paper,based on the panel data of the A-share market companies from 2008 to 2021.This paper tries to find the influence of margin trading on the R&D manipulation behavior of enterprises under the selective industrial policy.The findings are as follows:(1)Comparing with the enterprises that can’t be short selling,the probability of R&D manipulation of the enterprises that allowed to be short selling is significantly lower.Margin lending and short selling can inhibit the R&D manipulation by improving the internal company governance and the transparency of external stock information.(2)Heterogeneity research shows that,the effect of margin trading is more significant in the regions with poor external governance and high stock liquidity,that is,in non-state-owned enterprises,regions with high marketization and enterprises with low coverage of analysts,margin trading has stronger inhibitory effect on enterprise’s R&D manipulation.In order to make the conclusions more convincing,a series of robustness tests were carried out:Changing the control group sample,changing the R&D manipulation definition interval,changing the interpreted variable,etc.,the validity and robustness of the conclusions are verified.Furthermore,this paper uses Poisson regression to expand the research on the relationship between margin trading and enterprise R&D performance,it is also found that margin trading can promote the positive relationship between R&D investment and R&D performance,and restrain the negative relationship between R&D manipulation and R&D performance.This paper links the market supervision function of margin trading with the effectiveness of the implementation of industrial policy,which further broadens the connotation and extension of margin trading,providing a new idea on how to enhance the enterprise information transparency and improve the effectiveness of our industrial policy.Although margin trading has not been introduced for a long time in China,short-selling mechanism has played a good role in external governance,making up for the lack of internal governance level of enterprises,standardizing the behavior of enterprises,and reducing the cost of implementing industrial policies.The conclusion on this paper also gives us some advice on the expansion of the margin lending and short selling.