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Corporate performance under geoeconomic fragmentation: evidence from iberian transnational corporations
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Resumo(s)
This paper examines the value creation of Iberian transnational corporations (TNCs) from 2013 to 2023, focusing on the impact of geoeconomic fragmentation. Using data from 7,040 TNCs, we find that total shareholder returns (TSR) exhibited variability, driven by macroeconomic recoveries and geopolitical disruptions, with differences between Portuguese and Spanish firms. Lower geoeconomic risk is associated with a higher 1.60 percent TSR, emphasizing the importance of stable environments for multinational corporations, particularly for manufacturing firms. Key financial and strategic drivers of TSR also include financial performance, financial stability, cost of equity, growth opportunities, and geographical diversification. Additionally, firms with negatively skewed stock returns show higher corporate value as investors demand lower expected returns, particularly for firms not at extreme skewness levels. Our findings highlight the role of risk management and diversification strategies in enhancing firm performance when experiencing geoeconomic challenges. Results provide insights for corporate leaders, investors, and policymakers on the effects of global fragmentation on TNCs’ performance. Our results are robust to alternative models and variable specifications.
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Palavras-chave
Geoeconomic fragmentation Value creation Transnational Corporations (TNCs) Total Shareholder Return (TSR) Geoconomic risk