Trade Restrictions and Conflict Commodities: Market Reactions to Regulations on Conflict Minerals from the Democratic Republic of the Congo
In this paper, I use an event study approach to investigate the claim that conflict minerals legislation in the United States (US) led to a ban on some mining exports from the Democratic Republc of the Congo (DRC), and that the passage of US regulation caused a ban on both production and trade by regulators in the DRC several months later. I als oconsider the assertion that conflict minerals legislation imposed severe costs for companies that report to the Securities and Exchange Commission in the US. I find that returns for some companis traded on US stock exchanges were sensitive to changes in production in the DRC after the proposed legislation became law in the US. This either suggests that some financial market participants did not expect an immediate full embargo on newly-regulated Congolese mining and trading activities, or that market participants did not expect trade to be halted indefinitely. Reactions to a DRC-imposed ban on production were statistically significant; indicating that addtional reductions in trade were not fully anticipated by financial market participants after regulations became law in the US. I also find that among metal and gold mining companies traded on US exchanges, returns were abnormally high when conflict mineral legislation became more probable. Electronic communication manufacturing firms, which as a group were a target for many supporters of conflict mineral regulations, experienced no systematically abnormal returns corresponding to important dates in the US legislative process that I consider, but experienced abnormally positive returns coinciding with the ban on mining in the eastern DRC.
|Date of creation:||2013|
|Date of revision:|
|Contact details of provider:|| Postal: Manor Road, Oxford, OX1 3UQ|
Web page: http://www.oxcarre.ox.ac.uk/
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Deaton, A., 1999.
"Commodity Prices and Growth in Aftica,"
186, Princeton, Woodrow Wilson School - Development Studies.
- Gary Clyde Hufbauer & Jeffrey J. Schott & Kimberly Ann Elliott, 1990. "Economic Sanctions Reconsidered: 2nd Edition," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 82, January.
- Kaempfer, William H. & Lehman, James A. & Lowenberg, Anton D., 1987. "Divestment, investment sanctions, and disinvestment: an evaluation of anti-apartheid policy instruments," International Organization, Cambridge University Press, vol. 41(03), pages 457-473, June.
- Thorvaldur Gylfason & Gylfi Zoega, 2002. "Inequality and Economic Growth: Do Natural Resources Matter?," CESifo Working Paper Series 712, CESifo Group Munich.
- Taehee Whang, 2010. "Structural estimation of economic sanctions: From initiation to outcomes," Journal of Peace Research, Peace Research Institute Oslo, vol. 47(5), pages 561-573, September.
- Hossein Askari & John Forrer & Jiawen Yang & Tarek Hachem, 2005. "Measuring Vulnerability to U.S. Foreign Economic Sanctions," Business Economics, Palgrave Macmillan, vol. 40(2), pages 41-55, April.
- Stefano DellaVigna & Eliana La Ferrara, 2007.
"Detecting Illegal Arms Trade,"
NBER Working Papers
13355, National Bureau of Economic Research, Inc.
When requesting a correction, please mention this item's handle: RePEc:oxf:oxcrwp:102. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Celia Kingham)
If references are entirely missing, you can add them using this form.