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

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.