Top-down policy communication and the pricing of earnings news: evidence from China’s Politburo meetings

This paper examines whether top-down policy communication affects the market’s pricing of firm-specific earnings news. Using hand-collected Politburo meetings and China’s A-share earnings announcements from 2006Q3 to 2023Q4, we find that earnings response coefficients are about 51% lower during meeting windows. The attenuation is concentrated in economy-related rather than party-affairs meetings and remains robust to common-date shocks, policy-day volatility, and disclosure retiming. Cross-sectional tests indicate that the attenuation is stronger for firms with lower earnings quality, higher return synchronicity, and less persistent institutional ownership. Investor-search and retail-attention measures rise during meeting windows but become less responsive to earnings surprises, while earnings remain predictive of future operating fundamentals. Taken together, these results provide suggestive evidence that investor attention may shift away from firm-level earnings news during Politburo meeting windows.