49 Pages Posted: 2 Jan 2014 Last revised: 24 May 2017
Date Written: May 22, 2017
We use 10-K filings to construct novel text-based measures of the extent to which U.S. firms are exposed to three offshore activities: the sale of output, purchase of input, and ownership of producing assets. Our main result is that selling output abroad is associated with higher stock returns, especially when output is sold to more central nations in the real trade network. In contrast, offshore input serves as a hedge. Our findings are consistent with the conclusion that aggregate quantity shocks are the primary source of the priced risk we document in the global trade network.
Keywords: Offshore Activities, Global Trade Network, Consumption Risk
JEL Classification: D23, F14, F23, G12, G15
Suggested Citation: Suggested Citation