Analysis and Research on Short-selling Industry Chain based on Luckin Coffee Incident from the Perspective of Information Disclosure

Abstract

With the shorting of Luckin Coffee by Muddy Waters in 2020, the sniping of Chinese stocks by short-sellers has once again aroused widespread social concern. This paper introduces the company background, analysis the whole process of the Luckin Coffee case based on a comprehensive industry chain from the perspective of investment banks, short-sellers, other investment institutions and law firms and gives relevant suggestions based on regulators, limited companies and investors. Three conclusions are drawn: the genuineness, accuracy, integrity and timeliness of information disclosure is the key aspects of short selling; enterprises should improve the quality of information disclosure to cope with the shorting industry chain; a suitable short-selling mechanism could be established to motivate enterprises to improve information disclosure. The significance of this paper is to explore the positive role of short-selling in an active way, in order to fulfill the stable development of China’s capital market.