Cross-Border Transmission of Geopolitical Uncertainty

14 Pages Posted: 19 Jun 2019

See all articles by Taehyun Kim

Taehyun Kim

Chung-Ang University

Yongjun Kim

University of Seoul

Date Written: June 9, 2019


Using unexpected changes in geopolitical tension on the Korean peninsula as a quasi-natural experimental setting, we document the international transmission of geopolitical uncertainty. We find that U.S. firms that are more sensitive to Korean political uncertainty exhibit significant price responses in the short time window around a significant geopolitical event in Korea. The effects are more pronounced for U.S. multinationals, which are more sensitive to geopolitical risks stemming from outside the U.S.

Keywords: geopolitical risk, event study, firm value, news-based uncertainty measure, international transmission, multinational corporations

JEL Classification: G14, G15, G18

Suggested Citation

Kim, Taehyun and Kim, Yongjun, Cross-Border Transmission of Geopolitical Uncertainty (June 9, 2019). Available at SSRN: or

Taehyun Kim (Contact Author)

Chung-Ang University ( email )

Heuksok-ro 84, Dongjak-gu
Seiul, 06974
Korea, Republic of (South Korea)
8228205627 (Phone)

Yongjun Kim

University of Seoul ( email )

Korea, Republic of (South Korea)

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