EUROPEAN REVIEW OF BUSINESS ECONOMICS

[Digital ISBN: e-2184-898X | https://erbe.autonoma.pt]

ERBE 04 1 06

Corporate Performance under Geoeconomic Fragmentation: Evidence from Iberian Transnational Corporations

MÁRIO COUTINHO DOS SANTOS a,b, RAFAEL MYRO c, ANTÓNIO CARRIZO MOREIRA d, JORGE MOTA d

a CICEE, Universidade Autónoma de Lisboa, Portugal, b Universidade Católica Portuguesa, c Complutense University of Madrid, Spain, d Department of Economics, Management, Industrial Engineering and Tourism, University of Aveiro, Portugal.

To cite this article:

Santos, Mário Coutinho dos, Rafael Myro, António Carrizo Moreira, Jorge Mota. 2024. Corporate Performance under Geoeconomic Fragmentation: Evidence from Iberian Transnational Corporations, European Review of Business Economics IV(1): 115-144.

DOI: https://doi.org/10.26619/ERBE-2024.1.6

Received: 27 December 2024. Accepted: 13 January 2025. Published: 15 January 2025.

Language: English

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Abstract

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 higher TSR, emphasizing the importance of stable environments for multinational corporations. 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.

Keywords

Geoeconomic Fragmentation; Value Creation; Transnational Corporations (TNCs); Total Shareholder Return (TSR); Geoconomic risk.

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