Marcus Biermann

We study whether multinational corporations transmit the effects of a localized banking crisis to countries all over the world. We identify an exogenous shock to the credit supply of multinational parent corporations located in Germany. The shock to parents caused a reduction in the sales of their international affiliates for three years. We use unique data on linkages between parents and affiliates to study the transmission mechanism from parents’ credit supply to affiliates’ sales. Both financial constraints and intrafirm trade played a role: Parents withdrew equity from their affiliates, required more long-term lending from the affiliates, and traded less with their affiliates. The results improve our understanding of the internal operations of multinational firms and suggest that multinationals contribute to global business cycle synchronization.

What is the effect of supply potential on the size distribution of firms? I collected historical data between 1882 and 1907 from the German Empire to address this question. I can then match two data sets according to the same geographic boundaries: industry census data and bilateral railway trade data. The key findings are that supply potential impacts the firm size distribution heterogeneously across five size categories. I find evidence of a hierarchical and stark shift in employment and firm share from the smallest toward larger firm size categories. A distance instrument is proposed to argue that the correlations described are indeed causal. I provide evidence for a fall in trade costs and technology adoption as mechanisms to explain the stylized facts observed in the data.

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)