Trade Policy Uncertainty And Corporate Value

In recent years,the United States has abused trade protection measures to restrict the export of goods from other countries around the world to the United States,which has severely impacted the international economic and trade order and increased the uncertainty of trade policies.In particular,since 2019,the United States has issued a series of restrictive and buffering policies on export control "Entity List" against Huawei and its global affiliates.In view of this,based on a series of events that "Entity List" policy was issued to against Huawei by the United States,this article uses the event research method to analyze the stock price response of Huawei’s global industrial chain companies after relevant events,and then explores the impact of trade policy uncertainty on corporate value,which conducts an empirical study on the logical chain of “trade policy(macro)-Huawei global industrial chain(medium)-industrial chain enterprise value(micro)”.First,this article manually extracts and sorts out the scope of Huawei’s global industrial chain and the status of listed and non-listed companies in the industrial chain,and conducts research on 546 listed companies.Then,this article uses the event research method market model to calculate the average cumulative abnormal return rate of Huawei’s global industrial chain companies during the window period of three "Entity List" restrictive policy release events and five "Entity List" buffer policy release events.After that,this article mainly focuses on the restrictive policies on Huawei’s "Entity List" issued by the United States for the first time on May 15,2019.Through multiple regression model,this article examines the value effect differences of relevant policies on Huawei’s global industrial chain enterprises from multiple dimensions,such as the types of enterprises in the industry chain and the countries and regions where they are located.Finally,this article further studies the affect of the potential operation and credit risks on the operating income and costs,working capital financing structure,and R&D investment of Huawei’s global industrial chain companies,which caused by the uncertainty of trade policies.The study found that the "Entity List" restrictive policy will have a negative impact on the value of Huawei’s global industry chain,while the "Entity List" buffer policy will have a positive impact on the value of Huawei’s global industry chain.Which indicates that from the industrial chain perspective,the trade policy uncertainty risk faced by a single enterprise will spread along the industrial chain and impact the enterprise value of its global industrial chain.The trade policy that strengthens the restrictions will reduce the enterprise value of the industrial chain,while the trade policy that eases the restrictions will increase the enterprise value of the industrial chain.At the same time,the closer the business connection between an enterprise and Huawei in the industrial chain,the more significant the decline in its value will be,while the value of an enterprise that has competitive business with Huawei in the industrial chain will increase.Moreover,the United States,as a policy maker,has a more serious negative impact on its enterprise value in the event of the first issue of restrictive policies on the "Entity List".Furthermore,after the "Entity List" event,the operating income and costs of US companies in Huawei’s global industrial chain have fallen more than non-US companies,are more difficult to use commercial credit than nonAmerican enterprises,and less use short-term financial liabilities and other aggressive financing methods.In addition,influenced by the "Entity List" incident,Chinese enterprises in Huawei’s global industrial chain have shown a positive trend of increasing their R&D investment.In summary,the results of this article provide empirical evidence that in today’s globalized industrial chain,the return of closed and discriminatory trade policies will cause negative value effects on relevant industries and enterprises around the world,and it is difficult for individual countries to maximize their own interests by relying on trade protectionism.