Analysis On Market Reaction To Pollution Incident Of China Morden Dairy Holdings LTD

Now times, there is a growing consensus about the need for environmentalism, which is not only has a stake in realizing China’s economic sustainable development, but also appears to be more closely related with people’s health. As China’s economy roars ahead, people become increasingly concerns about environmental protection in the wake of countless pollution scandals revealed frequently among listed companies. China Modern Dairy Holdings Ltd is a Chinese leading enterprise in cow farming, and the direct victims of its pollution from the large-scaled poultry and livestock breeding farm is local residence. With broad impact and potentially consequences, its environmental pollution incident reflects people’s attitudes towards such events.The main research methods of this article are case analysis, event study and international comparison. By quoting and taking description of environmental event of China Modern Dairy as the starting point, this paper interprets the influence in capital market and social public from different angles like business performance, legal liability, finance capacity, stock opinions, etc., then elicits the risk of operating the pattern of "Million head of dairy cattle ranch" and capital market’s reaction to media intervention. Studies shows that pollution emergencies should cause irregular volatility in stock price, and such negative fluctuations may be even more significant especially when media hyped the issue. But in the long run, investors values earnings estimates of the company in the case of pollution itself. In the end, through integrating theory with practice, the paper reviews the analysis and finds inadequate points in environmental regulation, lawsuits, capital market, government administration, etc. from above incident and then puts forward corresponding improvement suggestion.