Financial immunity of companies from Indonesian and Shanghai stock exchange during the US-China trade war

Wijaya, Liliana Inggrit and Zunairoh, Zunairoh and Eriandani, Rizky and Narsa, I Made (2022) Financial immunity of companies from Indonesian and Shanghai stock exchange during the US-China trade war. Heliyon, 8 (2). e08832.

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This study aims to examine the country-level financial immunity and vulnerability due to the multidimensional impact of the US-China trade war by using potential driving factors, namely financial and market performance, economic conditions, and government interventions. This study uses financial distress as a moderating variable to examine the relationship between financial immunity and stock returns of companies listed on the Indonesia Stock Exchange and the Shanghai Stock Exchange, which have different characteristics. The research samples were companies listed on the Indonesia stock exchange and the Shanghai stock exchange with 767 and 736 observations, respectively, in 2016–2019. The first-stage test method uses balanced data panel regression to test individual interactions as a sufficient condition. Regression model specification of the response variable for the fixed effects model can overcome the common effects model limitations. The second stage is a matched test or Paired Samples T-Test for hypothesis testing after testing each individual interaction for each country. The results of this study show that financial immunity has a positive effect on stock returns in two countries: Indonesia and China. Meanwhile, the financial distress of the US-China Trade War for Indonesia and Shanghai shows different results. Financial distress significantly reduces stock returns on the Indonesian Stock Exchange, while the distress does not affect stock returns on the Shanghai Stock Exchange. During the US-China trade war, trade policy uncertainty has caused economic policy uncertainty, thus triggering systemic risks in ASEAN markets, including Indonesia.

Item Type: Article
Uncontrolled Keywords: Financial immunity; Financial distress; Stock returns; The US-China trade war; Multi-country; Multidimensional
Subjects: H Social Sciences > HD Industries. Land use. Labor > HD28 Management. Industrial Management
Divisions: Faculty of Business and Economic > Department of Management
Depositing User: Ester Sri W. 196039
Date Deposited: 02 Feb 2022 08:34
Last Modified: 16 Feb 2022 07:17

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