Nationalism and Economic Exchange: Evidence from Shocks to Sino-Japanese Relations
We study the impact of nationalism and interstate frictions on international economic relations by analyzing market reaction to adverse shocks to Sino-Japanese relations in 2005 and 2010. Japanese companies with high China exposure suffer relative declines during each event window; a symmetric effect is observed for Chinese companies with high Japanese exposure. The effect on Japanese companies is more pronounced for those operating in industries dominated by Chinese state-owned enterprises, while firms with high Chinese employment experience lower declines. These results emphasize the role of countries' economic and political institutions in mediating the impact of interstate frictions on firm-level outcomes.
We would also like to thank David Hirshleifer, two anonymous referees, seminar participants at the 2012 NBER Chinese Economy Working Group Conference, the 2012 Conference on Financial Economics and Accounting, the 2012 California Corporate Finance Conference, the 2013 NBER Japan Working Group Conference, University of Southern California, as well as Amy Amici, Shiro Armstrong, William Christie, Christina Davis, Harry DeAngelo, Charles Horioka, Takeo Hoshi, Yasheng Huang, Takatoshi Ito, Yi Jiang, Takao Kato, Masahiro Kawai, John Matsusaka, Hugh Patrick, David Weinstein, Bernard Yeung, and Xiaoyun Yu for helpful comments and suggestions. Fisman would like to thank the Chazen Institute of International Business at Columbia Business School for support; Hamao would like to thank CIBER at Marshall School of Business, USC for support; and Wang would like to thank CIBER at Marshall School of Business, USC and China Institute at USC for support. Rong Xu, Kazuo Yamada, and Jane Zhao provided outstanding research assistance. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.
Raymond Fisman & Yasushi Hamao & Yongxiang Wang, 2014. "Nationalism and Economic Exchange: Evidence from Shocks to Sino-Japanese Relations," Review of Financial Studies, Society for Financial Studies, vol. 27(9), pages 2626-2660. citation courtesy of