The 2015 Chinese Food Safety Law and market quality

Qizhi Wang and Rui Ota

Pacific Economic Review, 2019, vol. 24, issue 5, 631-641

Abstract: Safety standards, including food safety laws, provide necessary infrastructure to improve market quality. The present study investigates the impact of the revised Chinese Food Safety Law on the quality of China's food market. Using an event study approach, we empirically analyse the impact of nine official news events relating to the new Food Safety Law on the stock prices of companies engaged in food‐related businesses. The study demonstrates that three news events have a statistically significant and robust impact, and that all the events have a negative influence on the prices. The results show the possibility of a drop in market quality in the short term in the process of improving quality.

Date: 2019
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