Margin trading, short selling, and bond yield spread
Using a quasi-natural experiment, this study examines the effects of margin trading and short selling on bond yield spread in China. It finds that both margin trading and short selling can reduce bond yield spread. Additionally, it finds that margin trading lowers firms’ debt ratios and increases th...
| Main Authors: | , |
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| Format: | Article |
| Language: | English |
| Published: |
Elsevier
2018-03-01
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| Series: | China Journal of Accounting Research |
| Online Access: | http://www.sciencedirect.com/science/article/pii/S1755309117300369 |
| _version_ | 1819141824922517504 |
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| author | Kaijuan Gao Wanfa Lin |
| author_facet | Kaijuan Gao Wanfa Lin |
| author_sort | Kaijuan Gao |
| collection | DOAJ |
| description | Using a quasi-natural experiment, this study examines the effects of margin trading and short selling on bond yield spread in China. It finds that both margin trading and short selling can reduce bond yield spread. Additionally, it finds that margin trading lowers firms’ debt ratios and increases their credit ratings, which explains the reduced spread. In other words, margin trading can impact investors’ decisions by revealing positive information about a firm. Another finding is that short selling lowers the bond yield spread by decreasing earnings management, suggesting that short selling has an impact on investors’ decisions through its effect on corporate governance. Our results suggest that margin trading transmits positive information and short selling impacts firms’ policies. These results provide support for future regulations of margin trading and short selling. Keywords: Margin trading, Short selling, Bond yield spread, Information spillover |
| first_indexed | 2024-12-22T12:00:36Z |
| format | Article |
| id | doaj.art-ee7b1c54b74d4367b4fe8b3d463ec33f |
| institution | Directory Open Access Journal |
| issn | 1755-3091 |
| language | English |
| last_indexed | 2024-12-22T12:00:36Z |
| publishDate | 2018-03-01 |
| publisher | Elsevier |
| record_format | Article |
| series | China Journal of Accounting Research |
| spelling | doaj.art-ee7b1c54b74d4367b4fe8b3d463ec33f2022-12-21T18:26:38ZengElsevierChina Journal of Accounting Research1755-30912018-03-011115170Margin trading, short selling, and bond yield spreadKaijuan Gao0Wanfa Lin1Hunan University, China; Corresponding author at: School of Business, Hunan University, Hunan Province 410082, China.Wuhan University, ChinaUsing a quasi-natural experiment, this study examines the effects of margin trading and short selling on bond yield spread in China. It finds that both margin trading and short selling can reduce bond yield spread. Additionally, it finds that margin trading lowers firms’ debt ratios and increases their credit ratings, which explains the reduced spread. In other words, margin trading can impact investors’ decisions by revealing positive information about a firm. Another finding is that short selling lowers the bond yield spread by decreasing earnings management, suggesting that short selling has an impact on investors’ decisions through its effect on corporate governance. Our results suggest that margin trading transmits positive information and short selling impacts firms’ policies. These results provide support for future regulations of margin trading and short selling. Keywords: Margin trading, Short selling, Bond yield spread, Information spilloverhttp://www.sciencedirect.com/science/article/pii/S1755309117300369 |
| spellingShingle | Kaijuan Gao Wanfa Lin Margin trading, short selling, and bond yield spread China Journal of Accounting Research |
| title | Margin trading, short selling, and bond yield spread |
| title_full | Margin trading, short selling, and bond yield spread |
| title_fullStr | Margin trading, short selling, and bond yield spread |
| title_full_unstemmed | Margin trading, short selling, and bond yield spread |
| title_short | Margin trading, short selling, and bond yield spread |
| title_sort | margin trading short selling and bond yield spread |
| url | http://www.sciencedirect.com/science/article/pii/S1755309117300369 |
| work_keys_str_mv | AT kaijuangao margintradingshortsellingandbondyieldspread AT wanfalin margintradingshortsellingandbondyieldspread |