Bioeconomy enters the market: The effect of bioeconomy policies on stock market returns

Bioeconomy policies are pivotal for the transition to a competitive and sustainable circular economy. This study analyzes 11 bioeconomy policy events from the US and the EU (2005-2024), using both short- and long-term event studies to assess their effects on investor perceptions of bioeconomy companies’ competitiveness. The results show a statistically significant influence of bioeconomy policies on the abnormal returns of bioeconomy companies in the short and long term. A negative market reaction predominates in both the short and long term. When comparing the policies of the US and the EU, the US bioeconomy policies are perceived as a relatively less negative signal for investors in the short term, while the EU policy is seen to be a more long-term strategy. This research provides novel insights into the financial implications of bioeconomy policies, and informs about the role of policies for sustainable development and market strategies. • 11 bioeconomy policy events from the US and the EU • Statistically significant influence of bioeconomy policies on bioeconomy companies • Negative market reaction predominates in both the short and long term • US policies perceived relatively less negative signal in the short term • EU policy is seen as a longer-term strategy