How government policies and regulations will affect share prices of online game companies in China

Abstract

As a fast-developing emerging industry, online game companies are grasping attention from all over the world currently. Although the whole industry grows rapidly in terms of revenues and players, it is still not comprehensively regulated. As the country with the biggest number of users in the world, China is now on the way to regulate the online game industry. Thus, the purpose of this study is to examine the relationship between the share price reactions of Chinese online game companies and regulations or policies released by the government. To conduct this study, the event study and risk-adjusted model are used in the thesis. We identify that regulations or policies have significant reactions to share prices of Chinese online game companies.