The Impact of Forest Policy Modernization in British Columbia: A Stock Market Perspective

This paper examines the impact of a modernized forest policy change in 2021 on the stock prices of forest products firms that operate and hold tenure in British Columbia. Our results suggest that the announcement of new forest policies led to substantial losses in the stock prices of five major publicly traded forest products firms that operate in the province. As a control, we also found that another public company that operated in another Canadian province and was not subject to the policy changes experienced an insignificant impact on their stock price. The impact on market capitalization is related to the harvesting rights held by these companies within British Columbia under various forest tenures. The results highlight that, for a variety of reasons, investors thought the proposed policy changes would adversely impact each firm’s future financial performance.