When the Material Information Is Not‘Material’: The Dynamics of Disclosure Under China's Zero-Covid Policy
Hsiu–Wei Chang/Department of Accounting, National Taiwan University
Pang–Yu Wang/Institute of Finance and Economics, National Taiwan University
Jian–Wei Yu/Department of Accounting and Information Technology, National Chung Cheng University
Abstract
This study pioneers an examination of market responses to China's Zero-COVID policy, particularly its impact on firms with production facilities in lockdown-affected cities during the Great Lockdown. Utilizing an event study methodology, we demonstrate that these firms experienced significant declines in cumulative abnormal returns and revenue growth, coupled with increased investor disagreement. Critically, voluntary disclosures of shutdown-related material information effectively mitigated these adverse effects, leading to improved investor valuations and reduced disagreement. These findings underscore the crucial role of transparency in shaping market sentiment. This research contributes to disclosure theory by demonstrating the strategic value of proactive communication during times of extreme uncertainty, thus providing practical insights for firms and policymakers.
Keywords
Zero-COVID policyStock market reactionInvestor disagreementMaterial information disclosure
1971 Views 106 Downloads