Against the background of the increasing concealment of corporate tax avoidance behaviors, the market supervision value of the short selling mechanism has become increasingly prominent. Using Chinese A-share listed firms during 2016–2024 as the research sample, this paper leverages the quasi-natural experiment of phased expansion of margin trading and short selling. To start with, the staggered difference-in-differences approach is adopted to systematically explore the impact of short selling on corporate tax avoidance behaviors. The core explanatory variable "treat" is significantly negative at the 1% level, and the inhibitory effect remains robust after adding control variables, confirming that short selling can effectively constrain corporate tax avoidance behaviors; Secondly, heterogeneity analysis is carried out from three dimensions: enterprise scale, industry competition, and media supervision. It is found that the interaction terms between the three and short selling are all significantly negative at the 1% level, indicating that the inhibitory effect is more prominent in large enterprises and enterprises with strong industry competition, and media supervision can strengthen this effect; Thirdly, the reliability of the conclusions is verified through parallel trend test and placebo test, excluding potential interferences such as time trends and model settings; Finally, after considering other explanations, the research conclusions still hold.
Zhang Xinyue (2025) studied this question.