Trade policy and return on capital: An empirical analysis based on China's antidumping

This paper examines that how China's antidumping actions against other counties affect the returns to capital of involved industries. Using CSMAR from 1997 to 2015, we estimate the excess returns of a firm's equity by three different methods. Then combining with the Global Antidumping Database, we conduct an empirical analysis. Our empirical results show that China's antidumping investigation in specific industries promotes the return on equity of listed companies in the industry, meaning antidumping has positive impact on returns to capital. Antidumping promotes the marginal and average market value of firms' investment, thus showing excess returns on their equity, and then firms invest. As the investment stock increases, firms tend to be in equilibrium and excess returns fall. Furthermore, this paper conducts a series of heterogeneity analyses from the perspectives of capital intensity, capital specificity, and corporate ownership, and proves that antidumping measures can significantly increase the rate of return on capital in the industries involved.