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Economic policy uncertainty and stock market reactions to earnings announcements: Evidence from China

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  • Bai, Jiangtao
  • Song, He
  • Wang, Haojie
  • Liu, Yuetong

Abstract

Economic policy uncertainty (EPU) exacerbates the information asymmetry between companies and investors. This paper uses Chinese A-share listed companies from 2007 to 2021 as the research sample and employs the event study method to investigate the relationship between economic policy uncertainty and stock market reactions to earnings announcements. We find that economic policy uncertainty decreases (increases) investors’ sensitivity to positive (negative) earnings news. We further reveal that investor sentiment can mitigate the impact of economic policy uncertainty on stock market reactions to earnings announcements. These findings can provide practical insights for financial regulators and policymakers.

Suggested Citation

  • Bai, Jiangtao & Song, He & Wang, Haojie & Liu, Yuetong, 2025. "Economic policy uncertainty and stock market reactions to earnings announcements: Evidence from China," Finance Research Letters, Elsevier, vol. 85(PA).
    • Handle: RePEc:eee:finlet:v:85:y:2025:i:pa:s1544612325012000
    DOI: 10.1016/j.frl.2025.107942
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    References listed on IDEAS

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