Abstract
Hainan Island has a rich diversity of tourism resources. China’s central government recognized this and announced a national policy to promote Hainan Island as a first-rate international tourist destination on December 31, 2009. The authors explore the effects of the announcement using an event studies approach. The results with and without considering the clustering issue show that, first, the averages of cumulative abnormal returns are not different from 0 prior to the announcement and, second, the cumulative abnormal returns of the Hainan board continuously rose over trading days after the announcement of a regional tourism industrial policy. These findings indicate that regional tourism industrial policy is valuable not only to the tourism industry in the destination region but also to other industries in that region.
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