“Double reduction” policy in education industry and firm values: Evidence from China

Abstract

The excessive burden of students is a prominent problem entrenched in Chinese basic education that has not been well settled. Using the event study method, this paper quantifies the immediate effect of the “double reduction” policy on the education industry and other potential effects. In particular, we find that: (1) Compared with the initial regulatory policies on after-school tutoring institutions, the “double reduction” policy imposes a significant negative impact on the education industry. (2) The effect is more pronounced among the companies holding after-school tutoring business, private companies and the companies in non-pilot areas. (3) The investors may be little optimistic about education industry's transformation to the software and information technology industry or the effect has not yet emerged.