The Offshoring Return Premium

Gerard Hoberg () and S. Katie Moon ()
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Gerard Hoberg: Marshall School of Business, University of Southern California, Los Angeles, California 90089
S. Katie Moon: Leeds School of Business, University of Colorado, Boulder, Colorado 80309

Management Science, 2019, vol. 67, issue 6, 2876-2899

Abstract: We use 10-K filings to construct novel text-based measures of the extent to which U.S. firms are exposed to three offshore activities: the sale of output, purchase of input, and ownership of producing assets. Our main result is that selling output abroad is associated with higher stock returns, especially when output is sold to more central nations in the real trade network. In contrast, offshore input serves as a hedge. Our findings are consistent with the conclusion that aggregate quantity shocks are the primary source of the return premium we document in the global trade network. The online appendix is available at https://doi.org/10.1287/mnsc.2017.2929 . This paper was accepted by Lauren Cohen, finance.

Keywords: offshoring; outsourcing; risk premia; stock returns; firm organization; global trade network; consumption risk (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (17)

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