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Winners and Losers From Trade Agreements: Stock Market Reactions to TPP and TTIP
[journal article]
Abstract Which companies gain and which companies lose from trade agreements? In contrast to a view that sees the largest companies as the main beneficiaries of trade agreements, we argue that medium-sized companies gain the most from them. Moreover, we examine whether more capital-intensive and more diversi... view more
Which companies gain and which companies lose from trade agreements? In contrast to a view that sees the largest companies as the main beneficiaries of trade agreements, we argue that medium-sized companies gain the most from them. Moreover, we examine whether more capital-intensive and more diversified companies benefit more than other firms. Our empirical test relies on a dataset with daily firm-level stock price data for close to 4,000 US companies over the period 2009 - 2016. Concretely, we assess how the shares of different types of firms reacted to the news on the (lack of) progress of the negotiations aimed at concluding the TPP and TTIP. We find support for the view that medium-sized and diversified companies win the most from trade agreements. Besides speaking to the literature on the distributional effects of trade agreements, the article contributes to recent research on the role of firms in the international political economy and the stock market consequences of political events. It also presents a novel approach to measuring progress and stagnation in international trade negotiations using computational text analysis.... view less
Keywords
stock market; economic agreement; United States of America; international agreement; political economy; stock quotation; enterprise; distribution impact
Classification
Economic Policy
Free Keywords
TPP; TTIP; distributional effects; trade agreements
Document language
English
Publication Year
2023
Page/Pages
p. 200-211
Journal
Politics and Governance, 11 (2023) 4
Issue topic
Economic Security and the Politics of Trade and Investment Policy in Europe
ISSN
2183-2463
Status
Published Version; peer reviewed