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Market reaction to SEC identifications under the Holding Foreign Companies Accountable Act: Evidence from U.S.-listed Chinese firms

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  • Peng, Lu
  • Ji, Xudong
  • Ren, Helen Mengbing
  • Cheng, Peng

Abstract

This study examines the stock market’s reaction to the SEC’s identification of U.S.-listed Chinese companies under the Holding Foreign Companies Accountable Act (HFCAA). While prior research finds negative returns around market-wide HFCAA legislative events, we investigate the effect of firm-specific identification events. Using an event-study methodology, we find that identified firms experience significant negative abnormal returns. Our findings contribute to the literature by shifting the focus from market-wide legislative shocks to direct firm-specific regulatory enforcement, demonstrating the incremental information conveyed by these identification events, and providing new evidence on the market effects of regulatory and policy designations.

Suggested Citation

  • Peng, Lu & Ji, Xudong & Ren, Helen Mengbing & Cheng, Peng, 2026. "Market reaction to SEC identifications under the Holding Foreign Companies Accountable Act: Evidence from U.S.-listed Chinese firms," Finance Research Letters, Elsevier, vol. 90(C).
    • Handle: RePEc:eee:finlet:v:90:y:2026:i:c:s1544612325026352
    DOI: 10.1016/j.frl.2025.109386
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