Who Benefits from a TikTok Ban? An Event Study of American Social Media Companies
Abstract
This study examines U.S. social media company stock market reactions to changes in the likelihood of a TikTok ban from 2019-2025. The results indicate that large social media companies benefit from a TikTok ban while small social media companies are unaffected. These findings are inconsistent with theories of increased industry concentration. Rather, the results suggest that financial markets anticipate that a forced divestiture will result in a discounted sale price of ByteDance’s U.S. operations; an opportunity that only firms large enough to absorb such operations can take advantage of. These findings highlight a significant externality to regulatory interventions targeting foreign-owned subsidiaries and provide evidence of a new dimension through which firm distress, beyond financial distress, can cause “fire sale” discounting of assets.
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