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Impact of US Trade with China on Shareholders’ Wealth: Insights from Shipment Data in the COVID-19 Era

Author

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  • Mucahit Kochan

    (Department of Accounting, Finance, Management Information Systems and Economics, Governors State University, University Park, IL 60484, USA)

  • Cigdem Gonul Kochan

    (Department of Management and Marketing, Northeastern Illinois University, Chicago, IL 60625, USA)

Abstract

This study analyzes the impact of Chinese shipment volumes measured in TEUs on US stock performance in the initial stages of the COVID-19 outbreak. The analysis indicates that, initially, US stocks were negatively affected irrespective of firms’ trade engagements with China; however, as the global pandemic unfolded, companies with elevated imports from China exhibited more pronounced abnormal returns. The findings further reveal an increased influence of debt level and cash holdings on stock performance as the crisis intensified in Europe and the USA. These results highlight the evolving nature of global trade dynamics and their implications for financial markets amid global crises. Furthermore, this study provides valuable insights into the resilience of global supply chains during crises like the COVID-19 pandemic. The observed pattern, where companies with greater import volumes from China experienced better stock returns, underscores the importance of adaptable supply chains during disruptions.

Suggested Citation

  • Mucahit Kochan & Cigdem Gonul Kochan, 2024. "Impact of US Trade with China on Shareholders’ Wealth: Insights from Shipment Data in the COVID-19 Era," Economies, MDPI, vol. 12(3), pages 1-13, March.
    • Handle: RePEc:gam:jecomi:v:12:y:2024:i:3:p:67-:d:1355627
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    References listed on IDEAS

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    4. Viral V Acharya & Sascha Steffen, 2020. "The Risk of Being a Fallen Angel and the Corporate Dash for Cash in the Midst of COVID," The Review of Corporate Finance Studies, Society for Financial Studies, vol. 9(3), pages 430-471.
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