| Summary: | This article investigates bubbles in the Chinese film industry to reveal the industry’s boom and bust process that influences employment, citizen’s livelihoods, and even economic growth. We adopt the film stock index to reflect the industry’s trajectory and employ the generalized and backward sup augmented Dickey–Fuller tests to detect bubble periods. Empirical results indicate that there are three positive bubbles in 2007, 2013, and 2015, indicating that the film market continues to expand after temporary frustrations. Meanwhile, one negative bubble is found in 2019, which demonstrates that the bubble’s negative impacts persist and the film industry is still having problems such as declining industrial output. Economic growth, film quality, and industrial policies are common factors for all bubbles. The global financial crisis, capital in- and outflows, internet giants’ entry and sky-high remuneration are reasons for certain bubble behaviors. Hence, market practitioners should actively recognize bubbles and observe their evolution, which will favor industrial stabilization. A perfect legal system, moderate industrial policies, a competitive market environment, and other measures are needed to confront the opportunities and challenges.
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