Research On The Influence Of Environmental Regulations Of Heavy Metal Industry On Stock Price

Heavy metal pollution events arose frequently in recent years, which deteriorated natural environment and people’s health. Central government has put great effort on treating heavy metal pollution through investing in pollution control technology. At the same time, central government has strengthened the legal equipment to restrict the pollution behavior of the enterprises and has issued the first “special plan” together with a number of specific environmental regulations for the purpose of controlling of the heavy metal pollution. Most of the existing literatures on heavy metal pollution focus on how to t reat the pollution through pollution control technology, few of them did research from the perspective of social and economic study, especially on the effect of policy of heavy metal industry. This paper will discuss about the influence of state environmental regulations on the price of heavy metal industry by combining the policy effect and the capital market effect together.This paper collected the state environmental regulations for heavy metal industry published since 2009, and selected data from 2009 to 2013 for 126 listed companies in heavy metal industry, other heavy pollution industry and general industry which have environmental information disclosure, studied the impact analysis of state environmental regulations on the price of heavy metal indus try. Combined with the externality theory, this paper analyzed and compared the stock price effect brought by the state environmental regulations on the heavy metal industry, other heavy pollution industry and the general industry using event study method, and then analysis of the influence of different types of environmental regulations on stock price, Finally, studied the influence of the level of environmental information disclosure on the stock price effect of the state environmental regulations using the multiple linear regression analysis.The results from event study method show that the state environmental regulations have strong influence on the stock price of heavy metal industry, especially the regulations promulgated by the State Council and the regulations which belong to the type of command and control. The results from the multiple linear regression analysis show that the level of environmental information disclosure has negative correlation with the impact affected by, implying that environmental regulations have weaker influence on the companies with higher level of environmental information disclosure, which means that the level of environmental information disclosure will affect the investors making invest-decision when the environmental re gulations issued, and then the behavior of investors will affect the stock price. According to the empirical results, this paper gives advice to the investors, the companies and the regulation setting bodies respectively.This paper studied the impact of h eavy metal industry environmental regulations from the perspective of capital market for the first time, which not only fills the research gap in related areas, but also provides decision suggestion for stake-holders from multiple perspectives with a cert ain practical significance.