Seminario académico de Finanzas y Contabilidad

Fecha: 7 de junio, 13:00 horas, sala P307, Facultad de Economía y Negocios

Título: “Political Uncertainty Exposure of Individual Companies: The Case of the Brexit Referendum”

Expositor: Adriana Korczak, University of Bristol, Inglaterra

This paper studies cross-sectional determinants of the exposure of U.K. firms to Brexit, an event which resulted in an unprecedented rise in political uncertainty. We find that internationalization has a moderating effect on Brexit exposure which goes beyond the pure currency translation effect and is consistent with international activities acting as a diversification mechanism for domestic risks. The beneficial effect of foreign activities is driven by non-European activities, which suggests that to mitigate the impact of Brexit a primary focus of U.K. companies should be seeking out diversification opportunities outside Europe. Larger, high-growth and less profitable firms are more affected by the uncertainty associated with Brexit but we find no link between the percentage of European employees and Brexit exposure. The high exposure of growth companies to Brexit underlines the fact that clarity over future trading arrangements and regulations cannot come soon enough to protect investment. At the industry level, we show that Financials have the highest exposure to Brexit-related uncertainty and we suggest that this sector in particular, which contributed 7.2% of the U.K.’s gross value added in 2016, will require interventions to ameliorate the impact of Brexit.