Trade sanctions and supplier stock collapse

Yiwei Zheng and Yu Deng

Finance Research Letters, 2025, vol. 73, issue C

Abstract: Based on data from 163 listed companies in Huawei's supply chain and other suppliers in the same industry from 2013 to 2022, this article systematically explores the intrinsic link between U.S. trade sanctions on Huawei and the risk of stock market crashes among its suppliers. The research finds that these sanctions significantly increase the risk of stock price crashes faced by Chinese suppliers, primarily by undermining their business stability. The impact is more pronounced on private and electronic suppliers, while state-owned and non-electronic manufacturing suppliers are relatively less affected.

Keywords: Trade sanctions; Stock price crash risk; Difference-in-differences method (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:73:y:2025:i:c:s1544612324015915

DOI: 10.1016/j.frl.2024.106562

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