Open Access Journal

ISSN: 2183-2463

Article | Open Access

Winners and Losers From Trade Agreements: Stock Market Reactions to TPP and TTIP

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Abstract:  Which companies gain and which companies lose from trade agreements? In contrast to a view that sees the largest companies as the main beneficiaries of trade agreements, we argue that medium-sized companies gain the most from them. Moreover, we examine whether more capital-intensive and more diversified companies benefit more than other firms. Our empirical test relies on a dataset with daily firm-level stock price data for close to 4,000 US companies over the period 2009–2016. Concretely, we assess how the shares of different types of firms reacted to the news on the (lack of) progress of the negotiations aimed at concluding the TPP and TTIP. We find support for the view that medium-sized and diversified companies win the most from trade agreements. Besides speaking to the literature on the distributional effects of trade agreements, the article contributes to recent research on the role of firms in the international political economy and the stock market consequences of political events. It also presents a novel approach to measuring progress and stagnation in international trade negotiations using computational text analysis.

Keywords:  distributional effects; stock markets; trade agreements; TPP; TTIP


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© Lisa Lechner, Andreas Dür. This is an open access article distributed under the terms of the Creative Commons Attribution 4.0 license (, which permits any use, distribution, and reproduction of the work without further permission provided the original author(s) and source are credited.