A Case Study On The Frequent Malicious Short Selling Of Chinese Concept Stocks "GSX" In The United States

The road for Chinese enterprises to go to the United States can be traced back to the early 1990 s.They are seeking for overseas development and more financing opportunities.The American capital market attracts Chinese enterprises with its low entry threshold,mature and perfect system and deep structure.In the early stage,There were many restrictions on Chinese enterprises going public in the United States.However,with the rapid economic development in the 21 st century,China gradually relaxed the restrictions on private enterprises going public overseas.Driven by the Internet boom,a large number of domestic Internet emerging enterprises set foot on the journey of overseas development,opening the first act of Chinese private enterprises going public in the United States.Benefiting from the rapid development of the domestic economy,the "China concept" has been favored by international capital.The wave of Chinese enterprises going public in the US reached the highest point in 2010,and the number of Chinese enterprises listed on the US stock market reached a new record of 35.But such an optimistic situation did not continue,on the concept of the financial fraud of enterprises gradually raised the voice of doubt,since the second half of 2010,the concept of stocks have been subjected to a large-scale attack by short sellers,in 2011,the first crisis of confidence in the concept of stocks began to trigger investors fear of the concept of stocks.At the beginning of 2020,Muddy Waters shorted Luckin Coffee,and then Luckin coffee revealed financial fraud,which directly led to the climax of the second confidence crisis of Chinese concept stocks.The American capital market has more distrust of Chinese concept stocks,which makes it easier to question Chinese concept stock companies.The United States capital market related policy tightening,greatly suppressed the survival environment of Chinese concept stocks.Under the influence of the crisis,many Chinese concept shares in the United States have been shorted by short sellers,GSX had been the most seriously affected by the crisis.Since February 2020,the company has been short sold by a number of short sellers for a total of 16 times and received 13 targeted short selling reports,refreshing the record of short selling frequency of Chinese concept shares.In the face of such a strong short selling situation,GSX had taken various measures to deal with it,and achieved certain results but the effect has not been lasting.Therefore,this paper hopes to explore how Chinese concept stock enterprises should comprehensively and effectively counter short selling by analyzing the process of GXS short selling.First of all,this paper introduces the case research background and significance,literature review,research ideas and methods,and relevant theoretical basis.Second,based on the case part introduces the whole,in the second is trust crisis as the background,this paper in the case of the whole introduction part,to the second concept stock confidence crisis as the background,reviewed with who learn the whole process of the short chain.The paper sorts out the 16 short selling doubts of short sellers,summarizes the questioning contents of each short seller and the corresponding reply from GSX,and determines the existence of certain malevolence by analyzing the short selling techniques of short sellers.Then,starting from the external factors such as the confidence crisis of concept stock,the industrial chain system of short seller,and industry characteristics,as well as the internal factors such as the company’s operating performance,corporate equity governance structure,the rationality of the company’s business model,the defects of information disclosure,and,the short selling experience of Chinese concept stock enterprises,this paper explored the external and internal reasons of the short selling.Then,after summarizing the relevant measures taken by GSX to deal with short selling,this paper analyzed the impact of multiple rounds of malicious short selling on the stock price and business performance of GSX.Finally,after the above analysis,based on the analysis of the short selling motivation of GSX,this paper put forward relevant suggestions for Chinese concept stock enterprises to deal with malicious short selling,hoping that Chinese concept stock enterprises can constantly improve themselves,enhance their internal strength,successfully resist the attack of malicious short selling,and effectively resolve the short selling crisis.