Sino-US trade friction and the firm value: Evidence from listed firms in China

Abstract

The study investigates the relationship between Sino-US trade friction and the firm value of listed Chinese companies. Utilizing 3567 A-share listed companies, this paper evaluates whether the Sino-US trade friction identified by the 301 tariff list impacts the Chinese stock market. By applying the difference-in-differences strategy, we find that the 301 tariff list has a negative impact on the stock price in the Chinese financial market. This result is robust after carrying out several robustness checks. Lastly, we conduct a mechanism analysis by focusing on whether the 301 tariff list has different effects on different trade types, geographical locations, and financing constraints that may affect stock performance. We find that the 301 tariff list only affects the stock prices of the commodity trading companies and the coastal companies, and the negative impact of the 301 tariff list on company stock performance is greater for companies with higher levels of financing constraints.