Do Targeted Trade Sanctions Against Chinese Technology Companies Affect US Firms? Evidence from an Event Study

2021 ◽  
pp. 1-14
Author(s):  
Jeffrey S. Allen
Keyword(s):  
Stock Returns ◽  
Event Study ◽  
Model Uncertainty ◽  
Firm Value ◽  
Firm Level ◽  
Cross Sectional ◽  
The Us ◽  
Us Government ◽  
Trade Sanctions ◽  
Sectional Analysis

Abstract This article asks how costly targeted trade sanctions imposed by the US government are for domestic firms. I argue that, as a result of sanctions, the firm value of US companies that have supply relationships with sanctioned entities is likely to suffer from lost revenue, reputational damage, and business model uncertainty. I test this expectation by applying an event study to the important case of targeted trade sanctions against Chinese technology companies. I find that sanctions against these companies reduced their US suppliers’ risk-adjusted stock returns by 220 basis points. Firm-level cross-sectional analysis shows that businesses with stronger ties to the sanctioned entities are more negatively affected, which supports the direct connection between sanctions and relevant suppliers. Measuring the domestic economic ramifications of sanctions for the sender country has been elusive. These findings, which are statistically and economically significant, indicate that US companies face notable costs from sanctions against internationally active firms.

scholarly journals Analisis Dampak Shut Down US Goverment Tahun 2018 Pada Bursa Efek Indonesia

2020 ◽  
Vol 13 (1) ◽  
pp. 1-11
Author(s):  
Choirun Nisful Laili
Keyword(s):  
Stock Returns ◽  
Event Study ◽  
Stock Exchange ◽  
Abnormal Returns ◽  
Paired Sample ◽  
Cumulative Abnormal Returns ◽  
The Us ◽  
Us Government ◽  
Before And After

The purpose of this study was to determine the differences in returns, abnormal returns, and cumulative abnormal returns of shares before and after the US govermet 2018 shut down event. The object of research is companies that belong to the LQ-45 stock group on the Indonesia Stock Exchange. Research uses the type of event study. The results of the study using paired sample t-tests showed no differences in stock returns and abnormal returns for periods before and after the 2018 US government shut down event. For cumulative abnormal returns before and after the 2018 US government shut down event, differences were found.

Information risk, stock returns, and asset pricing: Evidence from China

2017 ◽  
Vol 30 (4) ◽  
pp. 379-394 ◽  
Author(s):  
Raheel Safdar ◽  
Chen Yan
Keyword(s):  
Stock Returns ◽  
Factor Model ◽  
Empirical Literature ◽  
Firm Level ◽  
Cross Sectional ◽  
Market Pricing ◽  
Content Type ◽  
Information Risk ◽  
Accruals Quality ◽  
Three Factor

Purpose This study aims to investigate information risk in relation to stock returns of a firm and whether information risk is priced in China. Design/methodology/approach The authors used accruals quality (AQ) as their measure of information risk and performed Fama-Macbeth regressions to investigate association of AQ with future realized stock returns. Moreover, two-stage cross-sectional regression analysis was performed, both at firm level and at portfolio level, to test if the AQ factor is priced in China in addition to existing factors in the Fama French three-factor model. Findings The authors found poor AQ being associated with higher future realized stock returns. Moreover, they found evidence of market pricing of AQ in addition to existing factors in the Fama French three-factor model. Further, subsample analysis revealed that investors value AQ more in non-state owned enterprises than in state owned enterprises. Research limitations/implications The study sample comprises A-shares only and the generalization of the findings is limited by the peculiar institutional and economic setup in China. Originality/value This study contributes to market-based accounting literature by providing further insight into how and if investors value information risk, and it seeks to fill gap in empirical literature by providing evidence from the Chinese capital market.

Does uncertainty boost overconfidence? The case of financial analysts' forecasts

2014 ◽  
Vol 40 (3) ◽  
pp. 300-324 ◽  
Author(s):  
Véronique Bessière ◽  
Taoufik Elkemali
Keyword(s):  
Stock Returns ◽  
Private Information ◽  
High Tech ◽  
Cross Sectional ◽  
Forecast Dispersion ◽  
Content Type ◽  
The Public ◽  
Public Announcement ◽  
Before And After ◽  
Sectional Analysis

Purpose – This article aims to examine the link between uncertainty and analysts' reaction to earnings announcements for a sample of European firms during the period 1997-2007. In the same way as Daniel et al., the authors posit that overconfidence leads to an overreaction to private information followed by an underreaction when the information becomes public. Design/methodology/approach – In this study, the authors test analysts' overconfidence through the overreaction preceding a public announcement followed by an underreaction after the announcement. If overconfidence occurs, over- and underreactions should be, respectively, observed before and after the public announcement. If uncertainty boosts overconfidence, the authors predict that these two combined misreactions should be stronger when uncertainty is higher. Uncertainty is defined according to technology intensity, and separate two types of firms: high-tech or low-tech. The authors use a sample of European firms during the period 1997-2007. Findings – The results support the overconfidence hypothesis. The authors jointly observe the two phenomena of under- and overreaction. Overreaction occurs when the information has not yet been made public and disappears just after public release. The results also show that both effects are more important for the high-tech subsample. For robustness, the authors sort the sample using analyst forecast dispersion as a proxy for uncertainty and obtain similar results. The authors also document that the high-tech stocks crash in 2000-2001 moderated the overconfidence of analysts, which then strongly declined during the post-crash period. Originality/value – This study offers interesting insights in two ways. First, in the area of financial markets, it provides a test of a major over- and underreaction model and implements it to analysts' reactions through their revisions (versus investors' reactions through stock returns). Second, in a broader way, it deals with the link between uncertainty and biases. The results are consistent with the experimental evidence and extend it to a cross-sectional analysis that reinforces it as pointed out by Kumar.

The Effect of Deregulation on Employee Earnings: Pilots, Flight Attendants, and Mechanics, 1959–1992

ILR Review ◽  
1996 ◽  
Vol 49 (2) ◽  
pp. 223-242 ◽  
Author(s):  
Pierre-Yves Crémieux
Keyword(s):  
Flight Attendants ◽  
Firm Level ◽  
Cross Sectional ◽  
Long Run ◽  
Airline Deregulation ◽  
Level Data ◽  
Negative Effect ◽  
Long Term Trends ◽  
Sectional Analysis

Previous studies of the effect of the 1978 Airline Deregulation Act on employee earnings have reported mixed results: some have found no negative long-run effect of deregulation and others have found a negative effect of up to 10%. Most of these studies relied on cross-sectional analysis of a few years' data. This paper, in contrast, examines the long-term trends in airline earnings, based on 34 years of newly collected firm-level data from the Department of Transportation's Form 41 and airline workers' unions. The author finds that although deregulation had no statistically significant effect on the earnings of mechanics, it strongly affected the earnings of flight attendants and pilots. Flight attendants' earnings were at least 12% lower by 1985 and 39% lower by 1992 than they would have been if deregulation had not occurred, and the corresponding shortfalls for pilots were 12% and 22%.

Matched-Long Term Maturity Stock and Bond Returns in International Markets

2002 ◽  
Vol 46 (2) ◽  
pp. 45-53
Author(s):  
Nusret Cakici ◽  
Mitchell Kellman ◽  
Elli Kraizberg
Keyword(s):  
Stock Returns ◽  
Average Rate ◽  
International Markets ◽  
Strong Positive Correlation ◽  
Bond Yields ◽  
Cross Sectional ◽  
Inflation Rates ◽  
Bond Returns ◽  
Sectional Analysis

This paper examines the relationship between real stock returns and matched-maturity long-term bond yields for 16 countries. We find a strong positive correlation between real stock returns and corresponding matched-maturity long-term bond returns for every country in the sample. Our findings also indicate that the volatility of long term real stock returns is closely related to the volatility of long term real bond yields. Finally, an additional cross-sectional analysis indicates that the sensitivity of real stock returns to real bond yields in each country is negatively related to the average rate of inflation and the coefficient of variation of these inflation rates.

scholarly journals Determinants of dividend behaviour in select indian companies - an empirical analysis

2013 ◽  
Vol 1 (1) ◽  
pp. 24-31
Author(s):  
Mohanraj V ◽  
Sounthri S
Keyword(s):  
Empirical Analysis ◽  
Cash Flow ◽  
Empirical Result ◽  
Flow Model ◽  
Firm Level ◽  
Cross Sectional ◽  
Dividend Policies ◽  
Indian Context ◽  
Main Determinants ◽  
Sectional Analysis

This study examines the Corporate Dividend Behaviour in the Indian context through Lintner‘s dividend model,Brittain‘s Cash Flow Model and Btittain‘s explicit Dividend Model. Results of this study will be uselful for designing dividend policies at the firm level and to analyze the saving behaviour at the macro level. The high dividend paying companies listed in NSE constitute the sample for the present study carried out as cross-sectional analysis for the year 2001-02 to 2011-12. The empirical result shows that the main determinants of current dividends are the Lagged Dividend and Current Earnings.

scholarly journals Corporate governance and financial markets

2016 ◽  
Vol 5 (3) ◽  
pp. 263-278 ◽  
Author(s):  
Avanidhar Subrahmanyam
Keyword(s):  
Corporate Governance ◽  
Stock Returns ◽  
Good Governance ◽  
Trading Activity ◽  
Cross Sectional ◽  
Institutional Holdings ◽  
Liquidity Trading ◽  
The One ◽  
Sectional Analysis

We link corporate governance with liquidity, trading activity, and the clientele that holds the firm’s stock. On the one hand high liquidity can decrease the quality of a firm’s governance because it reduces costs of turning over a stock attracting too many short-term agents who have little vested in good governance. On the other hand, liquidity can attract more sophisticated agents and hence improve the quality of a firm’s governance. In our cross-sectional analysis, we find that high liquidity is accompanied by poorer governance and vice versa. Further, increased institutional holdings are surprisingly associated with weaker governance in the 1990s, whereas in later years, they are not significantly related to governance. The proportion of orders transacted by small (large) traders is associated with weaker (stronger) governance, supporting the notion that a clientele consisting of small, unsophisticated investors can weaken the discipline imposed by outside investors on management. Given the known relation between corporate governance and stock returns, our results establish an indirect link between security prices and liquidity as well as trading activity, which goes beyond the direct channel described in Amihud and Mendelson (1986)

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