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An event study on Chinese stock market reaction to the issuance of the “bio-industry development plan”

Xuefeng He, Min He , Xiuxia Wang

This paper conducts an event study methodology to investigate how Chinese stock market responds to the issuance of the “Bio-industry Development Plan”. In this paper, we examine 123 listed companies under the influence of bio-industry with an event window of twenty-day. The empirical results indicate a significantly positive relation between the announcement of the “Bio-industry Development Plan” and the stock prices of these firms. Namely, the new plan increases both the companies’ value and shareholders’ wealth in a short period around the announcement date. Our paper not only highlights the new plan’s important guiding effect to bio-industry development, but enriches the existing related literature.