University at Buffalo School of Management

New research led by Veljko Fotak, associate pro- fessor of finance, suggests the Trump administration's decision to withdraw from various multilateral trade agreements may have been misguided. Published in the Journal of Banking and Finance, the study examined inves- tor-state dispute settlements (ISDS), which allow foreign investors to sue a host government in a third-party international court. "Imagine you opened a business in a developing nation and feel you're being unfairly regulated or taxed," Fotak says. "Without this dispute system, you're at the mercy of that country's potentially corrupt court system." Dispute panels are an important component—and source of controver- sy—in trade agreements from which the Trump administration has withdrawn. Proponents say the panels help American investors protect their assets abroad, while critics argue they undermine national sovereignty. "That's a good soundbite," Fotak says, "but in reality, these cases are rarely, if ever, brought against the United States, and without this mechanism, U.S. firms abroad may suffer." To isolate and evaluate the impact of ISDS systems, the researchers looked at loans made under bilateral investment treaties, where dispute systems are virtu- ally the exclusive feature. They compared the terms and outcomes of 45,000 loans from January 1980 to December 2013—rep- resenting 161 countries and $20.75 trillion total—and found dispute mechanisms in- creased the availability of capital, loan size and time to maturity, and decreased the cost of debt. On an average loan of $1.2 bil- lion, the presence of a dispute system re- sulted in about $7 million in savings. "Investors feel more confident en- tering developing markets where a treaty allows them to address grievances and pro- tect their investment," Fotak says. "By pull- ing out of these trade agreements, we're not defending U.S. sovereignty—we're aban- doning U.S. investors." Fotak's co-authors were Haekwon Lee, PhD '18, lecturer, University of Sydney Business School, and William Megginson, professor and Price Chair in Finance, University of Oklahoma Price College of Business. x Trump's trade deals harm U.S. investors, research shows Faculty earn media awards Two faculty members were recognized last spring with the School of Management's Visibility and Impact awards for their role in enhancing the school's reputation in the media. Kate Bezrukova, associate pro- fessor of organization and human resources, was lauded for having the broadest reach. She has been in- terviewed and quoted in such out- lets as Forbes, PBS NewsHour, The Atlantic, Psychology Today, ESPN and Sports Illustrated. Charles Lindsey, associate pro- fessor of marketing, received the award for the most media inter- views. He was quoted for his ex- pertise in marketing and consumer behavior 40 times in the past year in a variety of print, radio and web media, including USA Today, The Wall Street Journal and The Toronto Star. x Fotak Lindsey Bezrukova Autumn 2019 Buffalo Business 21

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