Abstract: Based on hand collected listed-company antitrust enforcement database, this paper uses event study to investigate response of stock market on antitrust enforcement, and provides primary evidence for the disciplinary effects of Chinese antitrust enforcement. Specifically, this paper finds that the market reacts negatively toward a company that will receive or already received antitrust investigation or final penalty, and the company will suffer a 11.5% loss of market value. In typical infringing industries, negative reaction will spill over to the whole industry, indicating that antitrust enforcement not only punishes infringing firms, but also effectively deters the whole monopoly industry. Further analysis on the heterogeneity of market reactions reveals that the strength of market recaction can be explained by direct law-breaking cost, readjustment cost of monopoly profit and market signal effect, and under China’s unique institutional background of antitrust enforcement, the strength of market reaction will also be affected by the nature of companie as central CEOs, type of enforcement agent and timeliness in release of infringement information. These results are of great significance for evaluating the achievements of antitrust enforcement in China, as well as for guiding the reform of antitrust legislation and enforcement agencies.

Key words: antitrust enforcement, disciplinary effects, event study method, market reaction