From Local to Global: Offshoring and Asset Prices

Lorenzo Bretscher ()
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Lorenzo Bretscher: Department of Finance, University of Lausanne, Swiss Finance Institute, Centre of Economic Policy Research, 1015 Lausanne, Switzerland

Management Science, 2023, vol. 69, issue 3, 1420-1448

Abstract: Industries differ in the extent to which they can offshore their production. I document that industries with low offshoring potential carry a sizeable risk premium compared with industries with high offshoring potential, suggesting that the possibility to offshore affects industry risk. A two-country dynamic trade model in which offshoring allows firms to secure market share against foreign competitors can rationalize the empirical findings.

Keywords: finance; asset pricing; international finance; macro finance (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:inm:ormnsc:v:69:y:2023:i:3:p:1420-1448

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