Exploring the Influence of Short-Selling Mechanisms on Stock Price Fluctuations: An Empirical Study of China's A-Share Market

Leveraging A-share market data spanning from 2016 to 2023, this research employs a difference-in-differences (DID) methodology to investigate how the short-selling mechanism affects stock price volatility. The findings indicate that the short-selling mechanism generally exerts a significant stabilizing influence on stock price volatility across the A-share market. However, this effect is relatively weaker among smaller firms.The conclusions of this study provide references for improving China's securities market trading system and legal framework.