Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
7360561 | Journal of Empirical Finance | 2018 | 58 Pages |
Abstract
Although the literature (Massa et al., 2011; Karpoff and Lu, 2010) demonstrates the disciplinary effects of short sales on managers, no study has analyzed how short sales can mitigate the agency costs of controlling large shareholders. Using the introduction of short sales in China as an exogenous event, we show that short sales also serve as an effective mechanism in curbing expropriation by the controlling large shareholder. The disciplinary effect is more pronounced for firms with higher ownership concentration and bankruptcy risk, and it is muted when alternative governance mechanisms are in place. Our paper provides new insights into the effects of short sales in the corporate governance domain, specifically in mitigating the agency costs between controlling and minority shareholders.
Keywords
Related Topics
Social Sciences and Humanities
Economics, Econometrics and Finance
Economics and Econometrics
Authors
Shenglan Chen, Bingxuan Lin, Rui Lu, Hui Ma,