Reshoring has become a widely discussed topic in the wake of disruptive events such as the 2020 pandemic, geopolitical tensions like the 2022 war in Ukraine, and recent protectionist sentiments, including the U.S. administration’s tariff regime. Faced with eroding comparative advantages and intensifying geopolitical uncertainty, firms have been forced to critically evaluate where and how they manufacture. As firms seek to reduce their exposure to global disruptions by relocating their production or supplier base to their home or nearby country, these developments have contributed to a surge in reshoring interest among academia and industry.
The growing number of firms revising their global value networks draws attention not only to the motives behind reshoring but also to how financial markets evaluate these decisions. Since relocating manufacturing operations generally entails considerable capital investment, operational adjustments, and long-term strategic commitments, stock price reactions can serve as a critical metric for assessing its impact on a firm's value. Despite the growing relevance of reshoring in the current economic and geopolitical climate, there is limited understanding of how investors respond to reshoring announcements. The inconclusive findings on the overall effect of these announcements highlight the need to examine not only the announcements themselves, but also how investors interpret the underlying contextual nuances. We address this gap by examining the following research question: How do decision characteristics, drivers and enablers relate to variation in investor responses to reshoring announcements?
Drawing on a sample of 57 reshoring announcements made by publicly listed firms in the U.S. and Europe between 2014 and 2025, this paper employs an event study to investigate how investor reactions are associated with reshoring announcements and their underlying decision characteristics, drivers and enablers. After screening for confounding events, we estimate cumulative abnormal returns and cumulative average abnormal returns, which capture stock price changes beyond regular market movements over the [0, +1] event window and 200 days estimation window using market model regression. Additional event and time windows as well as estimates based on the mean-adjusted model serve as robustness checks.
Our results show that capital markets do not respond positively to reshoring per se, but the devil lies in the detail: Depending on how such announcements are framed, investors reactions differ significantly. Specifically, we find that investors tend to respond positively to reshoring announcements when these are framed as forward-looking strategic choices, as well as related to customer perceived value improvements, internal factors and attractive home country conditions. Moreover, proactive announcements with explicit sustainability references generate higher abnormal returns than such without. These findings provide guidance for how managers should communicate reshoring decisions to provoke favourable market responses. Furthermore, they provide support for governmental programs, which are viewed favourably by investors when communicated accordingly.