ECONOMIC SANCTIONS AND THE SOURCE COUNTRY: HOW ECONOMIC SANCTIONS IMPOSED ON CHINA AFFECT THE U.S

John Shon

Global Journal of Business Research, 2011, vol. 5, issue 5, 1-9

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.).

Keywords: economic sanctions; Tiananmen Square Massacre; event study (search for similar items in EconPapers)
JEL-codes: F51 G14 (search for similar items in EconPapers)
Date: 2011
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