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Red Scare? A Study of Ethnic Prejudice in the Prosecutions under the Economic Espionage Act

Hanming Fang () and Ming Li ()
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Ming Li: Chinese University of Hong Kong

PIER Working Paper Archive from Penn Institute for Economic Research, Department of Economics, University of Pennsylvania

Abstract: We empirically test whether the Department of Justice (DOJ) engages in ethnic prejudice against Chinese in its prosecutorial decisions under the Economic Espionage Act (EEA) of 1996. Using data of EEA cases from November 1996 to June 2021, we conduct Becker’s outcome test for evidence of ethnic prejudice. We ?nd that Chinese-named defendants were more likely to be dismissed by trial or acquitted by jury, and were found guilty on fewer counts, and on average received harsher indictments. These results are robust regardless of whether we consider all cases or only arguably “marginal” cases. We also ?nd that, for those publicly listed victim ?rms whose trade secrets were allegedly stolen by the charged defendants, the stock market reaction was much more muted to the news on the case ?ling date if the charged defendants are of Chinese descent. Our study provides the ?rst systematic evidence that the DOJ’s prosecutorial decisions in the application of the EEA may have been tainted by ethnic prejudice against Chinese, including American citizens of Chinese descent.

Keywords: Outcome Test; Ethnic Prejudice; Statistical Discrimination; EEA (search for similar items in EconPapers)
JEL-codes: J7 K4 (search for similar items in EconPapers)
Pages: 56 pages
Date: 2021-09-13
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