Altruism or Hypocrisy? Short-selling Pressure and Corporate Social Responsibility

Li Jun, Liu Hongwei, Li Jingwen

Journal of Shanghai University of Finance and Economics Vol. 24, Issue 05, pp. 79 - 91 (2022)  DOI:10.16538/j.cnki.jsufe.2022.05.006

Summary

The information effect and governance effect of short selling pressure provide a feasible capital market approach for corporate social responsibility governance. Taking A-share listed companies from 2008 to 2015 as the research sample, this paper empirically tests the impact of short-selling pressure on the level of corporate social responsibility by using the PSM and DID methods. The results show that short-selling pressure significantly improves the level of corporate social responsibility, especially the social responsibility of external stakeholders and remote stakeholders, but has no impact on the social responsibility of internal stakeholders, which verifies the difference and consistency of corporate social responsibility. Further, the mechanism test finds that the effect of short selling pressure on the promotion of corporate social responsibility is more significant when the degree of information asymmetry is high or the agency cost is high, which proves that short-selling pressure affects the information effect and governance effect of the level of corporate social responsibility. The research of this paper reveals the internal relationship between short-selling mechanism and corporate social responsibility, enriches the literature on the economic consequences of short-selling mechanism and strategic management, and has important practical significance for promoting the institutional construction of China’s capital market and the development of corporate strategic management practice.

Keywords

short-selling pressure; corporate social responsibility; information effect; governance effect