NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH
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Mihai B. Ion

Eller College of Management
The University of Arizona
McClelland Hall 315H
1130 E Helen St.
Tucson, AZ 85721

E-Mail: EmailAddress: hidden: you can email any NBER-related person as first underscore last at nber dot org
Institutional Affiliation: The University of Arizona

NBER Working Papers and Publications

July 2020Using Equity Market Reactions to Infer Exposure to Trade Liberalization
with Andrew N. Greenland, John W. Lopresti, Peter K. Schott: w27510
We outline a method for using asset prices to identify firm exposure to changes in policy. We highlight the benefits of this approach for studying trade agreements and apply it to two US trade liberalizations, with China and Canada. We find that abnormal equity returns during key events associated with these liberalizations are correlated with standard measures of import competition, vary across firms even within industries, predict subsequent firm outcomes, and provide a more complete view of distributional implications. In both cases, predicted relative increases in operating profit among the largest firms dwarf the relative losses of smaller firms.
 
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