Short-Selling Mechanism and Corporate Green Innovation: Evidence from the Mediating Roles of ESG Performance and Analyst Coverage

DOI: https://doi.org/10.62517/jel.202614315

Author(s)

Bailin Zhang

Affiliation(s)

Aulin College, Northeast Forestry University, Harbin, Heilongjiang, China *Corresponding Author

Abstract

This study examines the impact of the short-selling mechanism on corporate green innovation using a sample of Chinese A-share listed firms from 2010 to 2024. A multi-period difference-in-differences (DID) model is employed based on 40,045 firm-year observations.The results show that the short-selling mechanism significantly promotes green innovation, with the coefficient on the short-selling indicator remaining positive and significant at the 1% level (approximately 0.070) after controlling for firm and year fixed effects. This finding is robust to a series of tests, including parallel trends, placebo tests, alternative variable specifications, and PSM-DID.Mechanism analysis indicates that the effect operates through improvements in ESG performance and increased analyst coverage, both of which serve as partial mediating channels.Heterogeneity analysis further reveals that the effect is more pronounced among state-owned enterprises, firms in non-polluting industries, and those located in the eastern region.Overall, the findings provide new evidence on how capital market institutions influence corporate green transformation and offer policy implications for improving the short-selling system and promoting sustainable development.

Keywords

Short-Selling Mechanism; Green Innovation; ESG Performance; Analyst Coverage

References

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