Shareholders and Stakeholders : Within-Firm Responses to Global Shocks

This paper examines the effects of economic shocks originating from China’s Five-Year Plans on firms’ shareholders and stakeholders in the U.S. Using establishment-level data, we show that the shocks were not preceded by low production or employment, nor were they anticipated by the U.S. stock market, but were followed by shrinkage of targeted sectors. Well-financed firms with adaptable sectorial and territorial layouts came out mostly unscathed due to within-firm adjustments, such as shifting production to upstream or downstream industries that benefited from the boost in the focal industries in China, or offshoring to encouraged industries in China. These adjustments extended limited benefits to employees and communities, measured by employment and opioid usage