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Political uncertainty exposure of individual companies: The case of the Brexit referendum

Research output: Contribution to journalArticle

Original languageEnglish
Pages (from-to)58-76
Number of pages19
JournalJournal of Banking and Finance
Volume100
Early online date30 Dec 2018
DOIs
DateAccepted/In press - 28 Dec 2018
DateE-pub ahead of print - 30 Dec 2018
DatePublished (current) - Mar 2019

Abstract

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. We also provide some indicative evidence that high-growth firms are more affected by Brexit. At the industry level, we show that Financials and firms in the consumer-facing sectors have the highest exposure to Brexit-related uncertainty. Knowledge of the variation in exposure of individual firms and sectors to political uncertainty associated with major political events can assist managers, investors and policymakers in taking remedial actions to limit its impact.

    Research areas

  • Brexit, Political uncertainty, U.K

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  • Full-text PDF (accepted author manuscript)

    Rights statement: This is the author accepted manuscript (AAM). The final published version (version of record) is available online via Elsevier at https://www.sciencedirect.com/science/article/pii/S0378426618302814 . Please refer to any applicable terms of use of the publisher.

    Accepted author manuscript, 700 KB, PDF document

    Embargo ends: 30/06/20

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    Licence: CC BY-NC-ND

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