An Executive Order worth $100 Billion: The Impact of an Immigration Ban’s Announcement on Fortune 500 Firms’ Valuation

37 Pages Posted: 20 Oct 2020

See all articles by Dany Bahar

Dany Bahar

Brookings Institution; Harvard University - Center for International Development (CID)

Prithwiraj Choudhury

Harvard University - Business School (HBS)

Britta Glennon

Wharton School, University of Pennsylvania

Date Written: October 16, 2020

Abstract

On June 22, 2020, President Trump issued an Executive Order (EO) that suspended new work visas, barring nearly 200,000 foreign workers and their dependents from entering the United States and preventing American companies from hiring skilled immigrants using H-1B or L1 visas. Exploiting this shock, and using event study methodology analyzing the cumulative average abnormal returns (CAARs) of Fortune 500 companies following this order, we find that the EO statistically and economically significantly caused negative CAARs of up to 0.45%, the equivalent of over 100 billion of US dollars of losses, based on the firms’ valuation before the event. Our results are particularly pronounced for firms that had maintained or increased their reliance on skilled immigrant workers over the prior years.

Keywords: immigration, visa, foreign workers, Fortune 500

JEL Classification: G14, G38, J61

Suggested Citation

Bahar, Dany and Choudhury, Prithwiraj and Glennon, Britta, An Executive Order worth $100 Billion: The Impact of an Immigration Ban’s Announcement on Fortune 500 Firms’ Valuation (October 16, 2020). Harvard Business School Technology & Operations Mgt. Unit Working Paper No. 21-055, Available at SSRN: https://ssrn.com/abstract=3713453 or http://dx.doi.org/10.2139/ssrn.3713453

Dany Bahar

Brookings Institution ( email )

1775 Massachusetts Ave, NW
Washington, DC 20036
United States

Harvard University - Center for International Development (CID)

One Eliot Street Building
79 JFK Street
Cambridge, MA 02138
United States

Prithwiraj Choudhury (Contact Author)

Harvard University - Business School (HBS) ( email )

Soldiers Field Road
Morgan 270C
Boston, MA 02163
United States

Britta Glennon

Wharton School, University of Pennsylvania

3620 Locust Walk
SH-DH
Philadelphia, PA 19104
United States

HOME PAGE: http://brittaglennon.com

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