EU–China Comprehensive Agreement on Investment: The impact of firm supply chains on firm value

Kees G. Koedijk, Xinrui Lin, Tong Qi*, Wenhui Qiang

*Corresponding author for this work

Research output: Contribution to journalArticleAcademicpeer-review

Abstract

This research adopts an event study approach to investigate the impact of the European Union (EU)–China Comprehensive Agreement on Investment (CAI) negotiations on firm value. We emphasise two typical events during the process, i.e. the preliminary agreement and the suspension of the CAI, which result in completely distinct patterns of policy uncertainty for the EU and China. Using data from Chinese listed firms, we find that the Chinese stock market reacts positively to the preliminary agreement of the CAI but negatively to its suspension. A firm with global supply chains has better stock returns when exposed to the first event but no significant heterogeneity under the second event. We also find that these effects vary depending on the overseas experience of the CEO, firm ownership type, and whether the firm is in a high-tech industry.

Original languageEnglish
Pages (from-to)363-382
Number of pages20
JournalEconomic and Political Studies
Volume12
Issue number4
Early online date2 Sept 2024
DOIs
Publication statusPublished - 2024

Bibliographical note

Publisher Copyright:
© 2024 Economic and Political Studies.

Funding

The authors received the financial support from the National Natural Science Foundation of China [Grant Nos. 72203061, 72341012] and the Fundamental Research Funds for the Central Universities [Grant No. 2021ECNU-HLYT033]. The authors would like to thank the editor and the two anonymous referees for helpful comments and suggestions.

FundersFunder number
National Natural Science Foundation of China72203061, 72341012
Fundamental Research Funds for the Central Universities2021ECNU-HLYT033

    Keywords

    • abnormal returns
    • Bilateral investment treaties
    • global supply chains
    • policy uncertainty

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