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Medical reform, Covid-19 vaccine and stock returns: the case of Chinese listed pharmaceutical and healthcare companies

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  • Ken C. Ho
  • Chunhui Chen
  • Da Yang
  • Yibo Gao

Abstract

This article analyses the stock returns of Chinese pharmaceutical and healthcare companies in response to the announcements of medical reform and Covid-19 vaccines, which are underexplored in the literature. Medical reform in China removes all drug markups of public hospitals; we find that the announcement of medical reform might not negatively impact the overall stock returns but only negatively impact young firms and small firms. Meanwhile, Covid-19 vaccines are deemed to be important weapons against the virus; we find that the announcements of Covid-19 vaccine approvals positively impacted the overall stock returns but did not benefit young firms and small firms. Our results imply that investors of the pharmaceutical and healthcare industries generally favour old firms and large firms when important medical news emerges.

Suggested Citation

  • Ken C. Ho & Chunhui Chen & Da Yang & Yibo Gao, 2024. "Medical reform, Covid-19 vaccine and stock returns: the case of Chinese listed pharmaceutical and healthcare companies," Applied Economics Letters, Taylor & Francis Journals, vol. 31(9), pages 832-839, May.
    • Handle: RePEc:taf:apeclt:v:31:y:2024:i:9:p:832-839
    DOI: 10.1080/13504851.2022.2152419
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