The Impact of Short Selling Mechanism on Accounting Conservatism: An Empirical Analysis Based on 120 Listed Companies

In 2010, China officially launched the margin trading and short selling pilot program, introducing the short selling mechanism into the market. Five years later, following abnormal market volatility, the mechanism underwent further adjustments and improvements. As a crucial component of accounting policies, accounting conservatism standardizes corporate accounting behaviors, prevents profit manipulation, and provides reliable information for investors. Both mechanisms serve to safeguard market stability and protect investors. However, in China, due to objective factors such as the unilateral market environment and traditional culture, there are numerous practical challenges in utilizing short selling mechanisms to enhance accounting conservatism. This paper aims to explore the impact of different institutional conditions on accounting conservatism, analyze the positive effects of short selling mechanisms, and discuss how to positively enhance corporate accounting conservatism within the Chinese market environment, thereby promoting the full recognition of potential losses and the true reflection of asset values.