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Hou study on population policy, demographic change and firm returns published in BE JEAP

Jan 4, 2019

Population Policy, Demographic Change, and Firm Returns: Evidence from China

Zhiyong An & Yilin Hou

The B.E. Journal of Economic Analysis & Policy, January 2019

Yilin Hou headshot

Yilin Hou

The authors take advantage of China’s relaxation in January 2014 of its “one-child” family planning policy to study the causal relationship between expected future demographic changes and firms’ stock returns. They use an event study method as our identification strategy and employ data from Chinese stock markets to implement the analysis. The authors find consistent evidence suggesting that expected demographic changes exert statistically and economically significant effects on firms’ stock returns. They address four potential threats about the validity of their empirical design and argue that their conclusion is not China-specific, but a generic lesson portable to developed countries.