The Impact of the “Double Reduction” Policy on the Stock Performance of Education Industry

Abstract

This paper studied the impact of the “Double Reduction” policy on educational technology companies by analyzing the company’s stock performance. This paper selected the market model to calculate the cumulative abnormal rate of return (CAR) through an event study approach and found that the introduction of the “Double Reduction” policy has a negative impact on the stock performance of Chinese education technology corporations. Then the study divided the education technology companies into four different size categories and calculated their CAR respectively to do the robustness check. Furthermore, the study used an alternative model to calculate the CAR, the constant mean model. The results hold the same. This empirical research fills in the existing gap on the effect of implementing the “Double Reduction” policy on the Chinese education technology company’s stock price.