Impact of the Brexit vote announcement on long-run market performance

We examine how the Brexit announcement influenced the market performance of British and European listed firms over a 12-month horizon after the announcement. Using daily data and a sample composed of 3,015 European listed firms (805 UK and 2,210 non-UK), we find that the Brexit announcement affected negatively the one-year financial performance of British (UK hereafter) firms and European non-British (non-UK hereafter) firms that conduct most of their business activities within the British area. We also provide the new evidence that, after the Brexit announcement, analysts’ earnings forecasts and the operational performance decreased, and the return volatility increased for UK firms. These novel results in the literature show definitively that the Brexit announcement has reduced the financial and operational performance over a 12-month period but exclusively for firms involved in British businesses.