The Heterogeneous Impact of Brexit: Early Indications from the FTSE

32 Pages Posted: 13 Jun 2017

Date Written: May 23, 2017


The UK’s decision to leave the EU is surrounded by several studies simulating its potential effects. Alternatively, we examine expectations embodied in stock returns using a two-part estimation process. While most firms’ prices fell, there was considerable heterogeneity in their relative changes. We show that this heterogeneity can be explained by the firm’s global value chain, with heavily European firms doing relatively worse. For firms with few imported intermediates, this was partially offset by a greater Sterling depreciation. These changes were primarily in the first two days and highly persistent. Understanding these movements gives a better understanding Brexit’s potential effects.

Keywords: Global Value Chain, Event Study, Brexit

JEL Classification: F150, F230, G140

Suggested Citation

Davies, Ronald B. and Studnicka, Zuzanna, The Heterogeneous Impact of Brexit: Early Indications from the FTSE (May 23, 2017). CESifo Working Paper Series No. 6478, Available at SSRN: or

Ronald B. Davies (Contact Author)

University College Dublin (UCD) ( email )

Belfield, Dublin 4 4

Zuzanna Studnicka

KU Leuven ( email )

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