Marcus Biermann

We study how internal capital markets of multinational corporations transmit shocks across countries. We identify an exogenous shock to the credit supply of multinational parents located in Germany. Using detailed data on financial linkages between parents and affiliates, we show that multinationals adjusted internal capital flows (internal loans and equity investments) away from international affiliates and toward the parent after the shock to the parent. Sales of affiliates fell sharply and recovered after three years. Affiliates with larger preexisting internal capital market linkages to the parent were more strongly affected. A back-of-the-envelope calculation based on our estimates implies that a global banking crisis outside the US could reduce aggregate sales in the US by 1 percent, solely because multinationals transmit the crisis to the US through their internal networks.

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)