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On Target? The Incidence of Sanctions Across Listed Firms in Iran

Mirko Draca (), Jason Garred (), Leanne Stickland and Nele Warrinnier ()
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Mirko Draca: Department of Economics, University of Warwick, Coventry, United Kingdom
Leanne Stickland: Department of Economics, University of Warwick, Coventry, United Kingdom
Nele Warrinnier: Faculty of Economics and Business, KU Leuven, Leuven, Belgium

No 1903E, Working Papers from University of Ottawa, Department of Economics

Abstract: How successful are sanctions at targeting the economic interests of political elites in affected countries? We study the efficacy of targeting in the case of Iran, using information on the stock exchange-listed assets of two specific political entities with substantial influence over the direction of Iran's nuclear program. Our identification strategy focuses on the process of negotiations for sanctions removal, examining which interests benefit most from news about diplomatic progress. We find that the stock returns of firms owned by targeted political elites respond especially sharply to such news, though other listed firms unconnected to these elites also benefit from progress towards sanctions relief. These results indicate the ‘bluntness’ of sanctions on Iran, but also provide evidence of their effectiveness in generating economic incentives for elite policymakers to negotiate a deal for sanctions relief.

JEL-codes: F51 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ara and nep-cwa
Date: 2019
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Working Paper: On Target? The Incidence of Sanctions Across Listed Firms in Iran (2019) Downloads
Working Paper: On Target? The Incidence of Sanctions Across Listed Firms in Iran (2019) Downloads
Working Paper: On Target? The Incidence of Sanctions Across Listed Firms in Iran (2018) Downloads
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