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On target? The incidence of sanctions across listed firms in Iran

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  • Mirko Draca
  • Jason Garred
  • Leanne Stickland
  • Nele Warrinnier

Abstract

How successful are sanctions at targeting the economic interests of political elites in affected countries? We study the e fficacy of targeting in the case of Iran, using information on the stock exchange-listed assets of two specific political entities with substantial influence over the direction of Iran's nuclear program. Our identification strategy focuses on the process of negotiations for sanctions removal, examining which interests benefit most from news about diplomatic progress. We find that the stock returns of firms owned by targeted political elites respond especially sharply to such news, though other listed firms unconnected to these elites also benefit from progress towards sanctions relief. These results indicate the `bluntness' of sanctions on Iran, but also provide evidence of their effectiveness in generating economic incentives for elite policymakers to negotiate a deal for sanctions relief.

Suggested Citation

  • Mirko Draca & Jason Garred & Leanne Stickland & Nele Warrinnier, 2019. "On target? The incidence of sanctions across listed firms in Iran," Working Papers of Department of Management, Strategy and Innovation, Leuven 648954, KU Leuven, Faculty of Economics and Business (FEB), Department of Management, Strategy and Innovation, Leuven.
  • Handle: RePEc:ete:msiper:648954
    Note: paper number 413/2019
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    Cited by:

    1. Thiemo Fetzer & Carlo Schwarz, 2021. "Tariffs and Politics: Evidence from Trump’s Trade Wars," The Economic Journal, Royal Economic Society, vol. 131(636), pages 1717-1741.
    2. Felbermayr, Gabriel & Syropoulos, Constantinos & Yalcin, Erdal & Yotov, Yoto, 2019. "On the Effects of Sanctions on Trade and Welfare: New Evidence Based on Structural Gravity and a New Database," School of Economics Working Paper Series 2019-3, LeBow College of Business, Drexel University.
    3. Ahn, Daniel P. & Ludema, Rodney D., 2020. "The sword and the shield: The economics of targeted sanctions," European Economic Review, Elsevier, vol. 130(C).
    4. Felbermayr, Gabriel & Kirilakha, Aleksandra & Syropoulos, Constantinos & Yalcin, Erdal & Yotov, Yoto V., 2020. "The global sanctions data base," European Economic Review, Elsevier, vol. 129(C).
    5. Philippe Aghion & Ralph Haas & Guido Friebel & Sergei Guriev & Jan Luksic, 2017. "Introduction to the Special Issue on the Economics of the Middle East and North Africa," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 25(2), pages 141-148, April.
    6. Dzhamilya Nigmatulina, 2022. "Sanctions and misallocation. How sanctioned firms won and Russia lost," CEP Discussion Papers dp1886, Centre for Economic Performance, LSE.
    7. Safoura Moeeni, 2022. "The Intergenerational Effects of Economic Sanctions," The World Bank Economic Review, World Bank Group, vol. 36(2), pages 269-304.
    8. Peeva, Aleksandra, 2019. "Did sanctions help Putin?," Discussion Papers 2019/7, Free University Berlin, School of Business & Economics.
    9. Nigmatulina, Dzhamilya, 2022. "Sanctions and misallocation. How sanctioned firms won and Russia lost," LSE Research Online Documents on Economics 118037, London School of Economics and Political Science, LSE Library.
    10. Aflatooni, Abbas & Ghaderi, Kaveh & Mansouri, Kefsan, 2022. "Sanctions against Iran, political connections and speed of adjustment," Emerging Markets Review, Elsevier, vol. 51(PB).
    11. Jie Sun & Lewis Makosa & Jinkun Yang & Fangyuan Yin & Moses Jachi & Wellington Garikai Bonga, 2021. "Externalities of economic sanctions on performance of intra‐industry non‐sanctioned firms: Evidence from Zimbabwe," Scottish Journal of Political Economy, Scottish Economic Society, vol. 68(5), pages 643-664, November.

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    JEL classification:

    • F51 - International Economics - - International Relations, National Security, and International Political Economy - - - International Conflicts; Negotiations; Sanctions

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