This study examines the impact of county-level immigration enforcement of section 287(g) mandates on the number of businesses in the United States. Using the difference-in-differences model, we find that the implementation of 287(g) negatively affected the total number of businesses. We find that counties with 287(g) agreements experienced a 6 percent decrease in the total number of businesses per 1000 county population and this negative effect appeared to be more prominent in businesses with a higher number of employees. Our findings shed light on the complex impacts of immigration policies on businesses, especially those reliant on immigrant labor.

Political instability is commonly thought to discourage investment and reduce economic growth. We challenge this consensus by showing that instability does not systematically depress investment. Using an event study approach, we examine daily returns of national financial indices in every country that experienced an irregular regime change subject to data availability. Returns following resignations are large and positive (+4 percent), while those following assassinations are negative and smaller in magnitude (−2 percent). The impact of coups tends to be negative (−2 percent), but we show that a pro-business coup results in large positive returns (+10 percent). We also find evidence that authoritarian or anti-business regime changes are more likely to lead to capital flight than democratic or pro-business changes. The immediate impact of political instability on investment is therefore dependent on the type of regime change and its expected impact on future growth.

This study examines the impact of repealing Sunday blue laws on alcohol sales and retail competition, focusing on Connecticut’s 2012 policy change allowing Sunday beer sales in grocery stores. Using nationwide data from 2004 to 2021, we find a short-term increase in beer sales post-policy change, but no significant long-term economic effects on grocery and liquor stores. Our analysis also shows similar treatment effects for chain and standalone liquor retailers, suggesting limited lasting implications for the liquor retail industry’s performance and conduct after Sunday sale restrictions were lifted.

We look at the effect of the WTO on stabilizing international trade using both a fixed-effects and an event study approach. Our results show that WTO members experience lower trade volatilties in a predictable and integrated system. In addition, we focus on the trade volatility comovement among countries in a multilateral framework. Previous research has mainly focused on WTO membership in a bilateral trade framework, which only allows interactions between two trade partners without considering any possible influence from other countries. A bilateral trade framework does not fully capture the effect of WTO membership, nor does it investigate why the multilateral platform of the WTO should exist. With a unique setup estimating interactions among multiple trading dyads, we find strong evidence supporting positive correlation or comovement of trade volatilities across trading pairs. Such a comovement appears much stronger among WTO members than between WTO and non-WTO members. Due to the feedback mechanism among dyads in a multilateral framework, such as the WTO, bilateral trade stability may further stabilize the global trade. Our results remain robust to a battery of sensitivity checks.

Leuven's Den Hoorn brewery, now AB Inbev SA, has become the world's largest brewing group by far, but critics say the company overpaid for its acquisitions. In this article, we study typical stock market reactions to the many takeover announcements by AB Inbev and the industry's runner-up, Heineken. Unlike Heineken's, the market leader's takeover announcements were met by, on average, a –2% price reaction in the stock market in the announcement month, but most of that is already undone in the next month. For Heineken, the same pattern shows up, only faster: the V-shaped reaction takes a few weeks rather than a few months. Such V-reactions may actually reflect a temporary rise in uncertainty rather than overpaying. The finding that reactions are reversed and heterogeneous across firms, raises issues of interpretation and optimal test design of event studies. (JEL Classifications: G12, G14, G17)

This study provides a perspective on the market performance of divestitures in the global brewing industry. In 2018, the five largest players accounted for 60% of the global beer volume. We analyze to what extent the capital market values divestitures in an industry where players usually seek efficiency gains and growth through mergers and acquisitions. Based on a sample of 61 divestiture intent announcements in the period from 1999–2018, this study shows that publicly listed brewing groups experience significant positive abnormal returns of about 1.4%. We measure the influential effect of success determinants concerning the underlying industry, the divested business, the divestiture structure, and the divestor itself. (JEL Classifications: G14, G34, L25, Q14)

This article asks how costly targeted trade sanctions imposed by the US government are for domestic firms. I argue that, as a result of sanctions, the firm value of US companies that have supply relationships with sanctioned entities is likely to suffer from lost revenue, reputational damage, and business model uncertainty. I test this expectation by applying an event study to the important case of targeted trade sanctions against Chinese technology companies. I find that sanctions against these companies reduced their US suppliers’ risk-adjusted stock returns by 220 basis points. Firm-level cross-sectional analysis shows that businesses with stronger ties to the sanctioned entities are more negatively affected, which supports the direct connection between sanctions and relevant suppliers. Measuring the domestic economic ramifications of sanctions for the sender country has been elusive. These findings, which are statistically and economically significant, indicate that US companies face notable costs from sanctions against internationally active firms.

This study examines the ways political events can affect the stock prices of politically connected firms by studying one of the biggest corruption scandals in modern South Korean history, which led to the first-ever impeachment of a sitting president. We analyzed the stock returns of firms that donated money to foundations allegedly controlled by the president's confidante. We found that the abnormal stock returns of politically connected firms decreased when the president was removed from office. Using tick-by-tick stock price data, we were able to pinpoint the exact moments when the stock prices of firms that donated money fluctuated, as the president's fate was determined by the justices of the Constitutional Court.

Climate change mitigation relies increasingly on clean technologies such as renewable energy. Despite widespread success, further deployment of renewables has been met with resistance from voters and governments in several countries. How resilient is the renewable energy industry to adverse political events? I use the unexpected election of Donald Trump in the 2016 U.S. presidential race to study this question. As a vocal critic of renewables and a supporter of fossil fuels, his election is a plausible negative shock to the renewable energy sector. I examine stock market data to gauge the reaction of investors. I find that renewable energy stocks were adversely affected by the election. Overall, they experienced a cumulative abnormal loss in share values of about 6 percent on average over the twenty days that followed the election. However, I find that the negative effect is concentrated among non-U.S. firms. U.S. firms, on average, emerged unscathed. Non-U.S. companies, on the other hand, lost over 14 percent of their value in the aftermath of the election. This suggests that markets are more concerned by increasing obstacles to international business than a decrease of federal support for renewables.

A previous study suggests that U.S. Senators trade common stock with a substantial informational advantage compared to ordinary investors and even corporate insiders. We apply precisely the same methods to test for abnormal returns from the common stock investments of Members of the U.S. House of Representatives. We measure abnormal returns for more than 16,000 common stock transactions made by approximately 300 House delegates from 1985 to 2001. Consistent with the study of Senatorial trading activity, we find stocks purchased by Representatives also earn significant positive abnormal returns (albeit considerably smaller returns). A portfolio that mimics the purchases of House Members beats the market by 55 basis points per month (approximately 6% annually).

The main aim is to question why we don't see more firms petitioning for import relief. It is well accepted that petitioning itself can restrain imports, lead to higher prices and hence higher profits (in the short run). What prevents more firms from filing for protection? It may be that petitioning reflects cost inefficiency on the part of the petitioning firm, and concerns about revealing this information might act as a deterrent for firms to come forward with their complaints. However, in a declining industry where a large number of firms are contemplating exit, petitioning could be a signal that the firm expects to remain in the market for the near future. The signaling hypothesis is tested by comparing the stock market response of an antidumping petition for petitioning firms and non-petitioning firms producing the same product.

The U.S. Department of Agriculture (USDA) releases crop condition reports detailing crop progress and growing conditions for various crops including corn, soybeans, and winter wheat. Previous research has investigated market impacts from various USDA reports, but crop condition reports have received little attention. This article investigates the impact of crop condition reports on winter wheat prices at the national level and for a local market. We employ both parametric and nonparametric tests. Results suggest that crop condition reports for winter wheat do not generally affect market prices. This contrasts with results found in corn and soybean markets.

This article presents a large-scale, systematic study of politically connected firms in China. It was conducted by compiling a database of all the publicly traded firms in China in 1993, 2002 and 2012 that codes the biographies of hundreds of thousands of board members. I find that there has been a significant increase in the percentage of firms that are connected with the national government in the last 20 years. This casts doubt on a popular argument that businesses in China have primarily relied on “local protectionism.” I interpret this as a result of firms' need to connect with powerful and stable institutions. I test this by examining the impact of the fall of Chen Liangyu on firms in Shanghai.

Due to red meat consumption, bovine spongiform encephalopathy (BSE) disease has been a major human health concern since its discovery in 1986. An event study approach was applied to determine the impact of BSE official events that occurred in the United Kingdom on U.S. live cattle futures prices. When abnormal returns were aggregated during the course of the events, the price series were adversely affected, mainly after the event day. This suggests that market reaction was dissipated quickly and that no leakage of information occurred prior to the event.

This study uses the numeraire portfolio to benchmark insurance stock returns as a natural measure for detecting abnormal insurance stock returns from catastrophic events. The assumptions underlying the efficient markets hypothesis using a numeraire denominated returns approach hold for catastrophic insurance events whereas other more traditional methods such as the market model and Fama-French three factor model often fail, typically due to the accumulation of estimation errors. We construct a portfolio of Australian insurance firms and observe the market reaction to major insured catastrophic events. Using the numeraire denominated returns approach we observe no particular trend in the cumulative abnormal returns of insurance securities following a catastrophic event. Using both the traditional market model and the Fama-French three factor model however, we observe significantly positive cumulative abnormal returns following an insured catastrophic event. The errors inherent in the market model and three factor model for event studies are shown to be eliminated using the numeraire denominated returns approach.