Marcus Biermann

We study how multinational firms transmit shocks across countries through their internal capital markets. We identify a lending cut by a single German bank, which reduced the credit supply of multinational parents located in Germany. Using detailed data on internal capital markets, we show that multinationals adjusted internal capital flows toward affected parents and away from international affiliates. Affiliate sales fell sharply and recovered after three years. The results indicate that preexisting internal capital market positions can be used to predict the degree of cross-country shock transmission and that idiosyncratic shocks from “granular” banks in one country affect growth internationally.

What is the effect of trade on the size distribution of firms? To answer this question, I collected historical data from between 1875 and 1907 from the German Empire. I was then able to match industry census data with bilateral railway trade from the same region and with tariff data from the same industry. I show that plausibly exogenous tariff movements caused a shift in the firm size distribution from medium-sized firms to larger firms. I observed a prominent shift in employment and firm share from smaller to larger firm size categories following increases in trade openness. I use a Bartik instrument to show that the correlations described are indeed causal.

This paper investigates how management practices as intangible assets are associated with performance of multinational business groups. I show that management practices of parents and affiliates are positively correlated. In the cross-section, better parent management practices are positively correlated with affiliate size and productivity. I use acquisitions as an event-study and find that better managed parents decrease employment post-acquisition. The positive correlation of parent management practices and affiliate productivity is strengthened, when the affiliate is in the first level of the corporate hierarchy or when the source country is more developed than the destination country in terms of income.

International Trade and Business Cycle Comovement: Causal Evidence

Financing Service Trade (with Peter Eppinger and Karol Paludkiewicz)