ABSTRACT
After recovering from the war in the 1950s, the growth of South Korea’s economy accelerated. The large trade surplus caused conflicts between the US and Korea. Similar to Taiwan, South Korea was frequently named by the US as an unfair trading partner in the 1980s, especially in the second half of the 1980s. Considering the importance of US markets to Korean export-oriented firms, the trade conflict events and the US trade deficit news should have some impact on their stock prices. 14 general U.S-Korea trade conflict events were identified from the WSJ during the period from 1984 to 1988. The export-oriented firms were identified according to industries. The trade deficit news effect on the market return is expected to be insignificant because of the “watering down” effect. If not, the effect would be the same as that on the export-oriented firms.
