Does External Governance Hinder or Improve Firm Innovation? Evidence from the Short Selling Pressure

Yang, Liu; Ahuja, Gautam

doi:10.5465/ambpp.2021.10575abstract

Cited by 1 publication

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“…Innovation activities show that the company has more than sufficient cash flow for its business and has the capability to care about future development, which is a proper message and good image sent to public by redirecting their attention when the attacks of short sellers reflect negative withheld information of the companies [12]. The research of [13] confirmed the positive relationship between short selling intensity and innovation activities, especially when companies suffer problems of low information transparency, low profitability, low internal control and suspected to be caught by regulatory authorities, which means managers indeed employed innovation activities as an instant defense and opportunistic behavior over the adverse effect of short selling.…”

Section: Literature Reviewmentioning

confidence: 99%

Relaxation of Short-Selling Constraints and Innovation Investments of Energy Industry in China

Mai

Hamid

2022

EJENERGY

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The purpose of this research is to determine the effect of short-selling restrictions on the corporate innovation investments of China's publicly traded energy businesses. According to external governance theory, it is predicted that the deregulation of short selling serves as a monitoring role for energy businesses' innovation investments, which are particularly vulnerable to energy efficiency issues. Between 2010 and 2018, a multiple linear regression is undertaken on a panel data set of Chinese 64-listed energy companies. According to descriptive data, the average innovation investment of Chinese energy businesses is 2.24%, indicating a low level of innovation in the energy sector. The regression findings demonstrate that easing short-selling limitations may benefit energy businesses' innovative activity. The outcomes of this study indicate that financial officials should explore further loosening short-selling restrictions, which might benefit sectors of the energy business that are highly dependent on technological innovation practices and performance.

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Section: Literature Reviewmentioning

confidence: 99%