Nationalism and economic exchange: evidence from shocks to Sino-Japanese relations

Raymond University*, Yasushi Hamao, Yongxiang Wang

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

68 Citations (Scopus)


We study the impact of nationalism and interstate frictions on international economic relations by analyzing market reaction to adverse shocks to Sino-Japanese relations in 2005 and 2010. Japanese companies with high China exposure suffer relative declines during each event window; a symmetric effect is observed for Chinese companies with high Japanese exposure. The effect on Japanese companies is more pronounced for those operating in industries dominated by Chinese state-owned enterprises, whereas firms with high Chinese employment experience lower declines. These results emphasize the role of countries' economic and political institutions in mediating the impact of interstate frictions on firm-level outcomes.

Original languageEnglish
Pages (from-to)2626-2660
Number of pages35
JournalReview of Financial Studies
Issue number9
Publication statusPublished - Sept 2014
Externally publishedYes


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