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Fake Products, Real Effects: Evidence from Special 301 Actions

Published online by Cambridge University Press:  24 November 2022

Mehmet I. Canayaz  and
Umit G. Gurun
Mehmet I. Canayaz
Affiliation:
Smeal College of Business Pennsylvania State University mcanayaz@psu.edu
Umit G. Gurun*
Affiliation:
Jindal School of Management University of Texas at Dallas
*
umit.gurun@utdallas.edu (corresponding author)
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Abstract

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We study how the U.S. government’s anti-counterfeiting enforcement actions through Special 301 Reports influence U.S. businesses. We show that anti-counterfeiting enforcement in foreign countries improves U.S. firms’ sales, profitability, and valuations. Firms significantly reduce capital and research and development investments when their brands and products are protected from counterfeiting activities. Anti-counterfeiting enforcement measures also improve brand asset value, brand profitability, brand inventiveness, market penetration, and customer loyalty.

Type
Research Article
Information
Journal of Financial and Quantitative Analysis , Volume 58 , Issue 5 , August 2023 , pp. 2024 - 2063
Copyright
© The Author(s), 2022. Published by Cambridge University Press on behalf of the Michael G. Foster School of Business, University of Washington

Footnotes

We thank Geoffrey Booth, Zeynep Gurhan Canli, Lauren Cohen, Tony Cookson, Jess Cornaggia, Kimberly Cornaggia, Bill Cready, Mara Faccio (the editor), Cesare Fraccassi, Benjamin Golez, John Griffin, Matthew Gustafson, Davidson Heath, Peter Iliev, Robert Kieschnick, Chris Malloy, Bugra Ozel, Chris Parsons, David Solomon, Eugene Soltes, Noah Stoffman, Andrew Toole, Kevin Tseng (discussant), Scott Yonker, and Alminas Žaldokas for their comments. We are especially grateful to an anonymous referee who provided numerous insightful comments. We also thank conference participants at the 2019 Northwestern/USPTO conference, the 2019 American Law and Economics Association Meeting at NYU, the 2019 Conference on the Convergence of Financial and Managerial Accounting Research as well as seminar participants at Baylor University, the University of Texas at Dallas, and Koc University. We thank BAV Consulting for sharing their data on brands, and Tom Kubic, Zarek Shaikh, and the Pharmaceutical Security Institute for sharing their data on pharmaceutical enforcement actions. All errors are ours.

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