Valuation Effects of US Semiconductor Restrictions on US Executives in Chinese Listed Companies

Abstract

Utilizing an event study methodology, this research examined the impact of the US semiconductor restrictions on corporate valuation. The findings reveal that publicly traded Chinese semiconductor firms suffered significantly diminished stock returns following the onset of the restrictions. The market's anticipation of disrupted business ties and the potential withdrawal of these key executives drove the decline in firm value. This negative impact was most acute in companies lacking prior US supply chains or cross-border mergers and acquisitions experience. Further analysis show that the presence of US CEOs exacerbated these losses while high levels of foreign shareholding served as a mitigating factor. Long-term data indicates that exposed firms aggressively scaled up R&D personnel to compensate for the loss of external expertise. This research highlights the importance of diversifying executive team, supply chain, and capital structure to mitigate geopolitical risks.