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on International Activities of Firms |
| By: | Holger Breinlich; Martina Magli |
| Abstract: | Services account for one-third of global trade, yet little is known about the impact of trade restrictions on services trade. To make progress in this area, it is crucial to understand through which modes services are traded (cross-border, consumption abroad, foreign investment or movement of people) and how firms substitute among these modes. We provide novel micro-level evidence on firms' mode choices, combining detailed data on UK firms' trade and affiliates' sales. We also estimate the substitution between trade modes using Brexit as an exogenous shock, finding that UK firms increasingly relied on local affiliate sales to serve the EU market after 2016. This shift protected firm-level services exports from the expected higher trade barriers after Brexit, but at the cost of lower domestic employment. |
| Keywords: | Trade Shocks, Services Trade, Modes of Supply, Brexit |
| Date: | 2026–05–15 |
| URL: | https://d.repec.org/n?u=RePEc:cep:cepdps:dp2182 |
| By: | Holger Breinlich; Elsa Leromain; Martina Magli |
| Abstract: | This paper examines how policy-induced supply-chain shocks affect firms' performances, using the UK-EU Trade and Cooperation Agreement (TCA) as a source of exogenous variation. Using UK microdata on firm-level goods and services trade linked to firm's outcomes and employer-employee records, we document a sharp decline in firms’ imports of intermediate goods from the EU after 2021. We then show that firms more exposed to EU input sourcing experience declines in employment and sales, with corresponding effects on workers’ hours and pay. These impacts are heterogeneous across occupations, with larger losses concentrated among lower-skilled roles. Interestingly, we find that firms' services activities play an important role in mediating the impact of GVCs disruptions. On the one hand, these firms experience smaller declines in intermediate inputs imports; on the other hand, they experience stronger negative reactions to the overall GVC shock. |
| Keywords: | GVCs, trade in goods and services, Brexit, TCA |
| JEL: | F13 F14 F16 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_12672 |
| By: | Holger Breinlich; Elsa Leromain; Martina Magli |
| Abstract: | This paper examines how policy-induced supply-chain shocks affect firms' performances, using the UK-EU Trade and Cooperation Agreement (TCA) as a source of exogenous variation. Using UK microdata on firm-level goods and services trade linked to firm's outcomes and employer-employee records, we document a sharp decline in firms' imports of intermediate goods from the EU after 2021. We then show that firms more exposed to EU input sourcing experience declines in employment and sales, with corresponding effects on workers' hours and pay. These impacts are heterogeneous across occupations, with larger losses concentrated among lower-skilled roles. Interestingly, we find that firms' services activities play an important role in mediating the impact of GVCs disruptions. On the one hand, these firms experience smaller declines in intermediate inputs imports; on the other hand, they experience stronger negative reactions to the overall GVC shock. |
| Keywords: | GVCs, Trade in Goods and Services, Brexit, TCA |
| Date: | 2026–05–15 |
| URL: | https://d.repec.org/n?u=RePEc:cep:cepdps:dp2183 |
| By: | Peng XU |
| Abstract: | This study investigates the role of turnaround alternative dispute resolution (ADR) in comparison with Civil Rehabilitation. Large firms and firms with more retained losses are more likely to use ADR than Civil Rehabilitation. Highly leveraged firms tend to use Civil Rehabilitation more than ADR. In terms of performance, firms that use ADR firms have lower leverage, better credit scores and higher quick ratios after debt restructuring than firms employing Civil Rehabilitation. Firms that utilize Civil Rehabilitation reduce assets and employment to a greater degree than ADR firms. Operating efficiency improvement and profitability recovery are the same for both treatments. Neither firms utilizing ADR nor those using Civil Rehabilitation reduce trade credit use. These results indicate that economically and financially distressed firms use ADR to restructure their businesses while avoiding financial collapse in bankruptcy. |
| Date: | 2026–05 |
| URL: | https://d.repec.org/n?u=RePEc:eti:dpaper:26040 |
| By: | Virginia Gianinazzi; Victoire Girard; Mehdi Lehlali; Melissa Porras Prado |
| Abstract: | This paper examines how Socially Responsible Investment (SRI) capital affects the environmental footprint of multinational enterprises. We exploit the inverse relationship between local pollution and high-frequency-and-precision satellite-based measurements of vegetation health, captured through the normalized difference vegetation index (NDVI). Combining NDVI with SRI ownership data for 52, 806 facilities belonging to 911 multinationals in 124 countries between 2006 and 2020 allows us to leverage both cross-sectional and within-facility variation in SRI exposure over time. We find that, on average, greater SRI ownership is associated with improved vegetation health in surrounding areas, consistent with reductions in firm-induced environmental damage. Using mergers as a plausibly exogenous source of variation in SRI ownership corroborates these findings. However, exploiting the global structure of multinational production networks, we find a striking asymmetry: improvements near facilities located in OECD countries coincide with deterioration near the same firms’ facilities in non-OECD countries, consistent with pollution offshoring. Finally, we show that this asymmetry intensifies with more active investor oversight, suggesting that investor engagement alone is insufficient to mitigate environmental harm in the absence of strong domestic regulation or global coordinated monitoring. |
| Keywords: | Socially Responsible Investment (SRI), Multinational Enterprises (MNEs), Normalized Difference Vegetation Index (NDVI), Plant-Level Pollution, Institutional Investors |
| JEL: | F23 G23 O33 Q56 Q58 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:unl:novafr:wp2505 |
| By: | K. Peren Arin; Ozan Eksi; Neslihan Kaya Eksi; Moo-Sung Kim |
| Abstract: | We examine the international transmission of US monetary policy shocks to European firms using high-frequency identification and granular firm-level panel data. Exploiting monetary policy surprises around FOMC announcements combined with firm-level data across eight European economies over 2004-2024, we document a sharp divergence in spillover effects. A contractionary US monetary shock significantly reduces investment rates and sales growth among UK firms, with investment declining by approximately 4% and sales growth by around 0.7-0.8% at peak, with effects persisting for two to four years. By contrast, Continental European firms, whether members of the euro area or independent-currency economies such as Sweden and Switzerland, do not exhibit a significant response. Heterogeneity analysis reveals that large and small UK firms bear broadly similar average burdens, with large firms showing more precisely estimated responses, while leverage does not systematically differentiate transmission. The UK-EU divergence is not explained by the exchange rate regime: the null result for Continental Europe extends to non-euro countries, pointing instead to the exceptional depth of UK-US financial integration, and the centrality of London in global dollar funding markets. |
| Keywords: | monetary policy spillovers, firm-level heterogeneity, international transmission channels |
| JEL: | E52 F43 |
| Date: | 2026–05 |
| URL: | https://d.repec.org/n?u=RePEc:een:camaaa:2026-33 |