Stock price responses to the eco-points programme for electrical household appliances: evidence from Japan

ABSTRACT

This article examines the Japanese government’s ‘Project for Green Consumer Electronics to Promote Business through the Use of Eco-points’ and its economic impact on consumer electronics firms’ stock prices. There has been little research on the economic effect of this project. In order to achieve our aim, we employ event study methodology. Our results show that stock prices responded positively to programme adoption, thereby indicating that the programme had positive effects on the related firms’ performance. The results also show that the programme’s economic effects gradually decreased over each subsequent programme extension. This probably occurred because the programme targeted durable goods, which consumers do not replace frequently.

KEYWORDS:

• Event study
• environmental stimulus policy
• capital market
• energy rebate programme

JEL CLASSIFICATION:

• G14
• H30
• Q58

Acknowledgements

The authors would like to thank anonymous referee for the valuable comments and fruitful suggestions.

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

¹ Other than environment-related stimulus policies, some research shows the effect of policies on financial performance using event study methodology. Using firm-level data, Berger (1993) shows that the 1981 Research and Development (R&D) tax credit increased R&D investment. Dong (2014) indicates that the Patient Protection and Affordable Care Act had a positive effect on health care-related firms.

² There are 24 consumer electronics firms that produce televisions, air conditioners and refrigerators: The Corona Corporation; the Chofu Seisakusho Co., Ltd.; Daikin Industries Ltd.; Hitachi, Ltd.; the Toshiba Corporation; the Mitsubishi Electric Corporation; the Panasonic Corporation; the Sharp Corporation; Fujitsu General Ltd.; the Sony Corporation; the SANYO Electric Co., Ltd.; the FUNAI Electric Co., Ltd.; Twinbird Corporation; Uniden Holdings Corporation; Technical Electron Co., Ltd.; MR MAX Corporation; Eizo Nanao Corporation; Pioneer Corporation; Doshisha Corporation; I-O DATA DEVICE, INC.; Rinnai Corporation; Mitsubishi Heavy Industries, Ltd.; Pixela Corporation; and MITANI Corporation. Since 11 out of 24 consumer electronics firms are companies whose divisions of televisions, air conditioners and refrigerators are not major, we drop these firms from the sample.

³ This is our limitation because we neglect the interpretation of our results based on behaviour finance.

⁴ We also carry out the estimation with all the firms, that is, 72 consumer electronics firms. The results that use all the firms are similar to those obtained with the sample in Section IV, from the perspective of both the average CARs and the CARs of each firm. The one-sample test of proportion with all the firms is also statistically significant.

Additional information

Funding

The authors gratefully acknowledge the financial support awarded under the Grant-in-Aid for Research in Nagoya City University and provided by the Nagoya City University. Tamechika would like to acknowledge the financial support awarded under the Grant-in-Aid for Young Scientists (B) No. 15K17054 and provided by the Japan Society for the Promotion of Science.