Authorized economic operator certification and export stability: Evidence from China's firms

Abstract

AbstractThis study examines the impact of the Authorized Economic Operator (AEO) certification on export stability. Using a new and unique dataset on AEO certification, combined with the Chinese Customs Enterprise Database and Chinese Industrial Enterprise Database from 2002 to 2013, we find that AEO certification has a positive impact on export stability by employing a staggered difference‐in‐differences empirical strategy. It reduces the likelihood of export failure, enabling certified firms to achieve higher efficiency and maintain competitive advantages in trade risks. The negative effect of AEO certification on export failure is prominent in firms exporting products with higher prices, more physical inspection, and higher requirements of customs clearance time. Along with AEO adoption, certified firms perform better in export stability than non‐certified ones.