Review of Short-Selling and Private Placement

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.