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Assessing the Impact of the Film Industry Promotion Law on Chinese Film Enterprises: A PSM-DID Approach

Jie Xin,Jun Ma,Miao Miao,Wan Ni

Published 2025 in SAGE Open

ABSTRACT

This study evaluates the impact of China’s Film Industry Promotion Law—the first industry-specific law in the cultural sector—on the financial and social performance of Chinese film enterprises. Using a Propensity Score Matching-Difference- in-Differences (PSM-DID) approach with data from A-share listed companies (2011–2019), the study finds that while the law improved social performance, it led to a decline in financial performance. However, overall corporate performance significantly improved. These results highlight the dual role of regulatory frameworks in balancing social benefits and economic outcomes. The study fills a research gap, introduces an innovative analytical framework, and enhances understanding of how institutional environments affect corporate performance, offering valuable insights for shaping film industry policies in developing countries. Plain Language Summary Assessing the Impact of China’s Film Industry Promotion Law on the Financial and Social Performance of Film Companies This study explores how China’s Film Industry Promotion Law, implemented in 2017, affects the performance of film companies. Using data from 2011 to 2019, the research employs a method that combines matching techniques with a difference-in-differences approach to compare the effects of the law on film companies and non-film companies. The results show that while the law led to a decline in the financial performance of film companies, it improved their social performance, particularly in corporate social responsibility (CSR) ratings. Overall, the companies’ performance improved when considering both financial and social aspects. This study is important because it shows the complex effects of government regulations, which aim to balance cultural and economic goals. The law helped film companies achieve social benefits, such as promoting cultural values, but also imposed financial challenges, highlighting a trade-off between economic success and societal contributions. The findings can help policymakers refine future regulations and guide other countries considering similar laws for their cultural sectors.

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