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Economic Sanctions And The Source Country: How Economic Sanctions Imposed On China Affect The U.S

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  • John Shon

Abstract

We perform an event study to assess one potential effect of economic sanctions on source countries. Specifically, for publicly-traded firms in the U.S. that report China as a geographic segment, we examine the stock price reaction to the Tiananmen Square Massacre, which occurred on June 4, 1989. Such firms experienced an economically- and statistically-significant negative market reaction to the Massacre. This finding suggests that the event increased the probability of economic sanctions against China, and that this increased probability adversely impacted at least one segment of the source-country’s population. Prior studies have examined the adverse effects to the target country (e.g., China), but have not been able to document systematic evidence of the effects to the source country (e.g., U.S.).

Suggested Citation

  • John Shon, 2011. "Economic Sanctions And The Source Country: How Economic Sanctions Imposed On China Affect The U.S," Global Journal of Business Research, The Institute for Business and Finance Research, vol. 5(5), pages 1-9.
    • Handle: RePEc:ibf:gjbres:v:5:y:2011:i:5:p:1-9
    as

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    References listed on IDEAS

    as
    1. Nicholas R. Lardy, 1994. "China in the World Economy," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 24, April.
    2. James A. Dorn, 1996. "Trade and Human Rights: The Case of China," Cato Journal, Cato Journal, Cato Institute, vol. 16(1), pages 63-76, Spring/Su.
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    More about this item

    Keywords

    economic sanctions; Tiananmen Square Massacre; event study;
    All these keywords.

    JEL classification:

    • F51 - International Economics - - International Relations, National Security, and International Political Economy - - - International Conflicts; Negotiations; Sanctions
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading

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