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The World Trade Organization's ministers failed to set an agenda for the Millennial Round of trade negotiations during their 1999 Seattle meeting, the first time such a meeting failed since multilateral trade agreements first began in 1947. Additionally, the Seattle meeting encountered unprecedented public protests against the WTO and trade liberalization, and globalization more broadly. How serious were the protests and the failure to commence a new trade round in Seattle? Utilizing an event study, we find that investors bid down the stock price of a portfolio of Fortune 500 firms almost two percent. Moreover, the cost to firms in industries perceived as environmentally or labor-abusive (the specific protest targets) was higher. A sub-sample of firms in "abusive" industries experienced negative returns of 2.7 percent, which was almost twice the decline for the remaining firms in "non-abusive" industries. Regression analysis shows that returns were driven primarily by a firm's inclusion in an abusive industry, rather than by its level of internationalization. Additionally, when the component halves of the abusive sample are analyzed separately, only firms in environmentally abusive industries experienced a statistically significant negative stock decline.
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Epstein et al. (2002) studied this question.
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