The Global Impact of Brexit Uncertainty

72 Pages Posted: 23 Dec 2019 Last revised: 12 Feb 2020

See all articles by Tarek Alexander Hassan

Tarek Alexander Hassan

Boston University

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 4 versions of this paper

Date Written: February 11, 2019


Using tools from computational linguistics, we propose a text-based method for isolating first and second moment exposures to shocks stemming from specific events at the firm level. Applying this method, we construct new measures of the impact of Brexit on listed firms in the United States and around the world: the proportion of discussions in quarterly earnings conference calls on the costs, benefits, and risks associated with the UK’s decision to leave the EU. We identify which firms expect to gain or lose from Brexit and which are most affected by Brexit uncertainty. We then estimate effects of the different types of Brexit exposure on firm-level outcomes. We find that the impact of Brexit-related uncertainty extends far beyond British or even European firms; US and international firms most exposed to Brexit uncertainty lost a substantial fraction of their market value and have also reduced hiring and investment. In addition to Brexit uncertainty (the second moment), we find that international firms overwhelmingly expect negative direct effects from Brexit (the first moment) when it comes to pass. Most prominently, firms expect difficulties from regulatory divergence, reduced labor mobility, limited trade access, and the costs of post-Brexit operational adjustments. Consistent with the predictions of canonical theory, this negative sentiment is recognized and priced in stock markets but has not yet significantly affected firm actions.

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). Available at SSRN: or

Tarek Alexander Hassan (Contact Author)

Boston University ( email )

595 Commonwealth Avenue
Boston, MA 02215
United States

Stephan Hollander

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

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


Laurence Van Lent

Frankfurt School of Finance and Management ( email )

Adickesallee 32-34
Frankfurt am Main, 60322


Ahmed Tahoun

London Business School ( email )

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

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