An Empirical Study On The Influence Of Environmental Regulation On The Stock Price Of API Companies

As Chinese environment protection Inspection began in the background of Supply-side Structural Reform,the paper treat the environment protection inspection as a Quasi natural experiment and try to build a relationship between environment protection Inspection and the stock price of Active pharmaceutical ingredients listed companies in methods of Difference in Difference and Propensity Score Matching models.The two years environment protection Inspection includs five different time periods and several �look back in� actions.The paper intend to use event study methods to study the influence of each Insepetion on API companys.The paper found that the central environmental inspection policy has a significant effect on the up move of stock price of some API companies.With the implementation of the policy,the stock prices of API increase a lot than the time before arrival of the inspectors.Through event analysis,it is also found that due to the lack of investor expectations,the API listed companies had significant abnormal positive returns and positive cumulative abnormal returns during Pilot action of the Chinese environment protection Inspection.During the first and second central environmental insepection,the listed API companies showed less remarkable abnormal returns.Finally,during the period of third and fourth environment Inspection,the API company showed significant abnormal returns again.