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The effect of antidumping and countervailing investigations on the market value of firms

Author

Listed:
  • Li, Wanli
  • Yan, Ziqiao
  • Sun, Wei

Abstract

Using a sample of listed Chinese firms between 2006 and 2012, we analyze the effect of international business strategy and government assistance on the stock market response to antidumping and countervailing investigations. We find a significantly negative abnormal return surrounding the announcements of antidumping and countervailing investigations. Furthermore, the establishment of a plant in a non-subject or “non-named”11As antidumping and countervailing investigations are country-specific, antidumping and countervailing duties are imposed only on imports from countries named in the petition. Following Ganguli (2008), we call such country a named or subject country. In contrast, the country not named in the petition is called a non-named or non-subject country. country and government assistance are positively related to the abnormal returns of antidumping and countervailing investigations. Our results suggest that government assistance is as important as strategic restructuring to offset the negative effect of trade remedy investigations.

Suggested Citation

  • Li, Wanli & Yan, Ziqiao & Sun, Wei, 2014. "The effect of antidumping and countervailing investigations on the market value of firms," International Review of Financial Analysis, Elsevier, vol. 36(C), pages 97-105.
    • Handle: RePEc:eee:finana:v:36:y:2014:i:c:p:97-105
    DOI: 10.1016/j.irfa.2014.08.006
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    References listed on IDEAS

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    1. Veysel Avsar, 2013. "Antidumping, Retaliation Threats, and Export Prices," The World Bank Economic Review, World Bank, vol. 27(1), pages 133-148.
    2. Nisha Malhotra & Shavin Malhotra, 2008. "Liberalization and protection: antidumping duties in the Indian pharmaceutical industry," Journal of Economic Policy Reform, Taylor and Francis Journals, vol. 11(2), pages 115-122.
    3. Robert M. Feinberg & Kara M. Reynolds, 2008. "Friendly Fire? The Impact of US Antidumping Enforcement on US Exporters," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 144(2), pages 366-378, July.
    4. Nisha Malhotra & Shavin Malhotra, 2008. "Liberalization and protection: antidumping duties in the Indian pharmaceutical industry," Journal of Economic Policy Reform, Taylor and Francis Journals, vol. 11(2), pages 115-122.
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    Cited by:

    1. Metiu, Norbert, 2021. "Anticipation effects of protectionist U.S. trade policies," Journal of International Economics, Elsevier, vol. 133(C).
    2. Feng, Xiaoli & Li, Wenjing & Peng, Yuanhuai & Tan, Youchao, 2021. "International trade friction and the cost of debt: Evidence from China," Pacific-Basin Finance Journal, Elsevier, vol. 67(C).
    3. Xiuping Hua & Ying Jiang & Qian Sun & Xinyi Xing, 2019. "Do antidumping measures affect Chinese export-related firms?," Review of Quantitative Finance and Accounting, Springer, vol. 52(3), pages 871-900, April.
    4. Li, Wanli & Li, Yue & Jacoby, Gady & Wu, Zhenyu, 2022. "Antidumping, firm performance, and subsequent responses," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 76(C).

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    More about this item

    Keywords

    Antidumping; Countervailing; Stock market reaction; Government assistance; International business strategy;
    All these keywords.

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading

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