Abstract
Chinese securities market introduced the margin financing and securities trading mechanism in 2010, which is considered to be a major step forward in stabilizing the stock market. Recent scholars’ research found that the short-selling mechanism can not only stabilize the stock market, but also generate external governance effects on the company. As a high-efficiency and low-cost refinancing method, private placement has been a research hotspot of Chinese scholars since the official launch of China’s capital market in 2006, especially the transfer of interests of major shareholders in the process of private placement. Therefore, this article provides a literature review of short selling mechanisms and private placements.
Highlights
Short-selling is an investment term that is an operational model of financial assets
The short-selling mechanism has been criticized in the capital market
Many investors believe that the short-selling mechanism will cause a sharp fall in the stock price, which is not conducive to the healthy and stable development of the stock market and harms the interests of investors
Summary
Short-selling is an investment term that is an operational model of financial assets. Many investors believe that the short-selling mechanism will cause a sharp fall in the stock price, which is not conducive to the healthy and stable development of the stock market and harms the interests of investors. The pilot of margin financing and securities lending in China’s capital market has great practical significance, and provides a natural experimental group and a control group for the pricing and governance effects of the short selling mechanism in academic circles, making it possible for Chinese scholars to study the short selling mechanism. The intention of the private placement system is to help listed companies to inject capital and assets more quickly, introduce new strategic investors to listed companies, and provide advanced management experience and technical support. The issue of the transfer of interests of major shareholders after private placement has been widely concerned by scholars, but it has suffered from no good solutions
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