The Impact Of Export Control On Suppliers And Its Influencing Factors

The United States has adopted various methods to restrict US suppliers from supplying Chinese companies by The export control policy,an important means for the United States to sanction other countries,in order to block Chinese companies from the supply side since the China-US trade friction.On May 15,2019,the US Department of Commerce announced that Huawei Technologies Co.Ltd.would be added to the Entity List,and US companies should obtain licence from Department of Commerce before they dealing with Huawei.However,while sanctioning Huawei,the policy can also have a impact on US suppliers,which may put pressure on policy implementation.The impact on suppliers can be measured by market reactions,as the US stock market is considered a semi-strong effective market.Therefore,this paper focuses on two questions: First,which factors affect the market response of export control policies? Second,what impact will the market response have?Scholars explored the historical development,motivations and influence of US export control policies.However,there is almost no literature discussing the differences in the impact of policy shocks on different suppliers,and there is less research on the counteraction of damaged suppliers.Therefore,the questions in this paper have some significance.In order to solve the above problems,we finish the following works.Firstly,calculate the cumulative abnormal return and the abnormal changes of market cap of suppliers by event study and Fama-French 3-factor model,so that we can measure market reactions.Secondly,filter influencing factors of market reactions by variation method and multiple regression analysis,and than research the mechanism of influencing factors acting on market response.Finally,discuss further impact of market reactions.The results show that the market response to export control policies is generally negative,but there are large differences between different suppliers.The factors that cause this difference include business factors and financial factors,of which the importance of Huawei to suppliers and the profitability of suppliers are the most important factors.The market reactions will have a diffusion effect on its industry,and cause suppliers to resist export control policies.This will not only hinder policy implementation,but also ease the impact of policies on the supply chain.Two lessons can be drawn from this.Firstly,by examining the business and financialcharacteristics of suppliers,market reactions can be predicted.Second,the effects of export control policy can be inferred by predicting the market response of suppliers.This is helpful for Chinese related entities to formulate coping strategies better when facing similar incidents.