Brexit: Short-term stock price effects and the impact of firm-level internationalization

Andreas Oehler, Matthias Horn and Stefan Wendt

Finance Research Letters, 2017, vol. 22, issue C, 175-181

Abstract: We perform an event study analysis to determine short-term abnormal stock returns following the Brexit referendum. Moreover, we examine whether firm-level internationalization helps explaining abnormal returns. We find that stocks of firms with higher proportions of domestic sales realized more negative abnormal returns than stocks of firms with more sales abroad, i.e., a higher degree of international diversification. While firm-level internationalization largely explains abnormal returns on the trading day after the referendum, it has no relevant pricing effect in the following days. The quick adjustment of stock prices to reflect firm-level internationalization indicates a high degree of market efficiency.

Keywords: Internationalization; Brexit; International diversification; Stock returns; Stock price effect; Event study (search for similar items in EconPapers)
JEL-codes: F65 G11 G12 G14 (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (24)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:22:y:2017:i:c:p:175-181

DOI: 10.1016/j.frl.2016.12.024

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