Market Reactions under Accounting Standards Lag: A Case and Event Study of NIO’s BaaS Short-Selling Incident

Abstract

Business model innovation often outpaces the issuance of detailed accounting guidance, and the resulting accounting standard lag expands managerial judgement space whilst reducing information comparability. Taking the short-selling report issued by Grizzly Research on NIO’s BaaS (Battery as a Service) model as a case, this paper adopts a case study approach supplemented by an event study to examine how the market prices accounting uncertainty. The findings indicate that, although relevant accounting risk information had already been publicly disclosed, the market failed to identify it effectively under normal conditions; by integrating and reframing existing information, the short-selling report acted as an ‘information activator’ and triggered a distinctly negative pricing reaction; in contrast, the point-by-point rebuttals issued by professional institutions did not bring about consistent price recovery within the short event window, with the abnormal return on the event day approaching zero. This suggests that what the market prices is not the accounting violation per se, but the accounting uncertainty arising from the lag in accounting standards. This paper uncovers the transmission mechanism of ‘accounting standard lag → information gap → market pricing reaction’ and offers implications for the development of accounting standards for innovative businesses and the improvement of information disclosure.