The Global Impact of Brexit Uncertainty

76 Pages Posted: 23 Dec 2019 Last revised: 4 Aug 2021

See all articles by Tarek A. Hassan

Tarek A. Hassan

Boston University; National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR)

Stephan Hollander

Tilburg University - Tilburg School of Economics and Management

Laurence van Lent

Frankfurt School of Finance and Management

Ahmed Tahoun

London Business School

Multiple version iconThere are 5 versions of this paper

Date Written: February 11, 2019

Abstract

We propose a text-based method for measuring and analyzing the international propagation of uncertainty shocks at the firm level. We apply this method to estimate the impact of Brexit-related uncertainty and find widespread reverberations on listed firms in 81 countries. International firms most exposed to Brexit uncertainty not only significantly lost market value but also reduced hiring and investments. In addition to Brexit uncertainty (the second moment), we find that international firms overwhelmingly expected negative direct effects from Brexit (the first moment). Most prominently, firms expected difficulties from regulatory divergence, reduced labor mobility, and limited trade access.

Keywords: Brexit, uncertainty, sentiment, machine learning, cross-country effects

JEL Classification: D8, E22, E24, E32, E6, F0, G18, G32, G38, H32

Suggested Citation

Hassan, Tarek Alexander and Hollander, Stephan and van Lent, Laurence and Tahoun, Ahmed, The Global Impact of Brexit Uncertainty (February 11, 2019). TRR 266 Accounting for Transparency Working Paper Series No. 11, Available at SSRN: https://ssrn.com/abstract=3501910 or http://dx.doi.org/10.2139/ssrn.3501910

Tarek Alexander Hassan (Contact Author)

Boston University ( email )

270 Bay State Road
Boston, MA 02215
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Stephan Hollander

Tilburg University - Tilburg School of Economics and Management ( email )

P.O. Box 90153
Tilburg, DC Noord-Brabant 5000 LE
Netherlands
+31 13 466 8288 (Phone)
+31 13 466 8001 (Fax)

HOME PAGE: http://www.uvt.nl/people/s.hollander

Laurence Van Lent

Frankfurt School of Finance and Management ( email )

Adickesallee 32-34
Frankfurt am Main, 60322
Germany

HOME PAGE: http://www.laurencevanlent.org

Ahmed Tahoun

London Business School ( email )

Sussex Place
Regent's Park
London, London NW1 4SA
United Kingdom

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