Abstract
Chinese manufacturers, which produce nearly one-fourth of global manufacturing outputs, play important roles in the global supply chains for many products. The Chinese government proposed the “Made in China 2025” plan to help manufacturers upgrade their technology, so that the country will become a green and innovative “world manufacturing power”. It is important for researchers, practitioners, and the government to know the benefits and costs of being environmentally sustainable. In this paper, we investigate the effects of environmentally sustainable announcements of Chinese firms in the manufacturing, and the wholesale and retail industry on their stock market performance. First, we find negative market responses, which are significant in scale and statistics. Second, the stock market reactions are different for firms in different industries. Third, the stock market reactions are different in different years. Finally, we control the firm size and the book-to-market ratio with the Fama–French three factor model. The result is highly consistent with the one from the simple market model.
Highlights
China became the world’s factory shortly after it entered the WTO [1]
We investigate the effects of environmentally sustainable announcements of Chinese firms in the manufacturing, wholesale and retail industries on its stock market performance
We find the stock market reacts negatively to the firms’ environmentally sustainable announcements
Summary
China became the world’s factory shortly after it entered the WTO [1]. According to the latest economic census data [2], by the end of 2015, about 17.81% firms in China are classified in the manufacturing industry, which provide more than 97.75 million jobs and create more than 6.61 trillion of Chinese Yuan of profits. China produces nearly one-fourth of global manufacturing output by value. China has suffered from very serious environment problems. The central government proposes the “Made in China 2025” plan to help manufacturers to upgrade their technology, so that the country will become a green and innovative “world manufacturing power” [14]. It is important for researchers, practitioners, and the government to know the benefits and costs of being environmentally sustainable
Sign-in/Register to view highlights & summary Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a call
