Empirical Analysis Of The Impact Of "Eight Rules" On The Market Value Of Wine-making Industry Listed Companies

The Party issued "eight rules" on the 4th of December in 2012. All over the country formulate implementation plans in succession and has started an intensive anti-corruption campaign to re-establish a healthy political environment. The position-related consumption of China’s civil servant dramatically reduced. It has a huge impact on cigarettes, alcohol, tourism, catering and other industries. The paper adopted event study to research the influence of "eight rules" on the wine-making industry listed companies.The event study is a statistical method use to analyze the effects on the stock prices of specific events. Event study uses Cumulative Abnormal Returns to study the effect of the shares of a particular event and uses Buy and Hold Abnormal Returns to measure the long run performance.The paper used AAR and CAAR in 20 days after announcement of the "eight rules" to measure short-term impact on wine-making industry and used BHAR in 2 years to measure long term performance. What’s more, this thesis gave a separate analysis of liquor industry, grape-wine industry and beer industry to explore the different response to the "eight rules". Then we divided the liquor industry companies into major companies and second-tier companies and we used the same method to analyze the different responds of two kinds of enterprises.The results of event study showed that:Firstly, from the wine-making industry overall, "eight rules" had a significant negative effect on the market value of listed companies in the short term. The CAAR in the event period returns as high as-17.12% and the BHAR in 2 years continued to fall. We can draw a conclusion that "eight rules" had a continuous negative influence on the listed companies of wine-making industry and the influence became weaker. Secondly, through the comparative analysis of liquor industry, grape-wine industry, beer industry listed companies, we can obtain that the negative influence on the liquor industry is the greatest. The CAR of liquor industry listed companies had the greatest reduction and fluctuating margin was bigger. The influence on the beer industry was minimal. The fluctuation of beer industry listed companies stock price is relatively small. In the long term, "eight rules’ had negative impact on the liquor industry and grape-wine industry. The impact on liquor listed companies was more significant and greater. However, the policy had positive impact on the market value of beer listed companies. Also, we concluded that the impact of "eight rules" on the three industries all became weaker. Thirdly, the major liquor companies had bigger response to "eight rules" than the second-tier liquor companies. The CAR of two kinds companies gradually separated and had a tendency to expand after the 9th day. In the 2 years, the wealth loss of major liquor companies was up to 80.83%, even greater than the second-tier companies. The negative impact of both two types of companies is weakened.In conclusion, "eight rules" had a negative effect on the wine-making industry as a whole in the process of issued and implemented. In this process, each company’s response was different. The policy made the consumption of alcohol return to the general public and the essence of product consumption. Wine-making companies should reposition their products and take market requirement as guide accordingly in new market conditions.