From December 4 to December 6, 2020, Qi Tong,Ph.D. candidate of our college, participated in the 2020 International Conference on US-China Trade Disputes and Reforms in Globalization jointly held by Center for International Finance and Economics Research and Research Center for International Digital Capital, Tsinghua University, and reported a paper:
Outward Direct Investment as a Shelter from External Trade Policy Shocks: Firm-Level Investigation of the U.S.-China Trade War
Abstract:
This study examines the effects of an external policy shock from the U.S.-China trade war on firms’ value. We first provide a simple model and then put the predictions into a test. Our results indicate that firms conducting outward direct investment (ODI) in the United States have significantly positive stock returns around the date of the outbreak of the trade war as compared with the negative impact of exporting firms. Moreover, we find that this “shelter effect” from ODI is more pronounced for sectors targeted by additional tariffs as well as for production-oriented ODI projects, while it is weaker for high-tech industries and state-owned companies.
