Impacts Of The Opening-up Events On Enterprise Values

The opening-up events reduce the international trade barriers, broadening the market size of enterprises, which contributes to the realization of regional economies of scale. The opening-up policy encourages enterprises to introduce foreign capital, technology, advanced management experience and other factors of production, which is conducive to the optimal resource allocation. It provides a good external environment for the development of enterprises, and thus affects the value of enterprises. The existing empirical research focuses on the opening-up events, such as the signing of the free trade agreement, the establishment of free trade area. The results show that the opening-up events usually affect the value of the related enterprises.In 1978, China implemented the opening-up policy as the basic national policy, which has greatly promoted the development of China’s economy. On August 22, 2013, China(Shanghai) Pilot Free Trade Zone was formally established. On December 12, 2014, the second batch of Free Trade Zone(FTZ) was formally established in Tianjin, Guangdong and Fujian simultaneously. These existing FTZs were set up less than two or three years. We find it is difficult to fully discuss the effects of FTZs, but we can pick and choose the listed enterprises as the research object to study the effects of FTZs on enterprise values. In practice, the FTZ concept stocks appeared in our capital market with the establishment of FTZs, which provides a good sample for our study.This paper choose the FTZ concept stocks from Shanghai, Tianjin, Guangdong and Fujian FTZs as the research object, analyzing the impacts of the opening-up events on enterprise values with Event Study Methodology. Considering the Price Limits Mechanism and information disclosure, we choose two estimation periods and two estimation models, exploring the changes in six different events. Based on the Area Superiority Theory, First-mover Advantage Theory, Industrial Cluster Theory and the Scale Economy Theory, this paper proposes hypotheses, namely, the establishment of FTZ has a different impact on different regionals, industries and the degree of internationalizations. We verify the original hypothesis by empirical analysis.The empirical analysis shows that the establishment of FTZ has a significant positive impact on enterprise values, which exists significant regional differences, industry differences and differences in the degree of internationalization. Specifically, the enterprises in Shanghai, the transportation industry and the high degree of internationalization obtained a more significant positive impact, different from other enterprises. We also find that investors react quickly and response in advance.This paper puts forward the following suggestions. For investors, they should take into account the enterprise heterogeneity before investments. When it comes to enterprises, they should expand overseas business and participate in international division actively. Transport enterprises should take the lead in adjusting development strategy, actively grasp the development opportunities brought about by the FTZs established. Based on the local resource endowment and comparative advantage, we should pay more attention to local conditions of the opening-up, which helps to build the FTZs.