Trade conflicts and energy firms' market values: Evidence from China

Abstract

Using the Sino-U.S. trade conflict on March 22, 2018 as an exogenous shock, this study shows that Chinese energy firms engaged with overseas business experienced statistically significant negative decline in their stock return. We further document that non-state-owned enterprises, firms faced with higher degree of marketization, high-tech firms, firms with a larger proportion of skilled labor and firms under moderate financial constraints suffer more from the Sino-U.S. trade conflict. This study suggests that firms with larger overseas revenue and the upstream sector should be especially careful about the possible risks in international trade.