Corporate Resilience and Response to COVID-19

Cheema-Fox, Alexander; LaPerla, Bridget Realmuto; Serafeim, George; Wang, Hui (Stacie)

doi:10.2139/ssrn.3578167

Corporate Resilience and Response to COVID-19

Journal of Applied Corporate Finance, Volume 33, Number 2, Spring 2021. To access paper, use this link https://onlinelibrary.wiley.com/share/author/YWEAEYPDWUAAPJPMRWGN?target=10.1111/jacf.12457

Posted: 17 Apr 2020 Last revised: 11 Sep 2021

See all articles by Alexander Cheema-Fox

Bridget Realmuto LaPerla

Lion and Arc LLC; Lion and Arc Securities LLC; TD Securities; State Street Associates

Hui (Stacie) Wang

Fidelity

Date Written: September 23, 2020

Abstract

The coronavirus pandemic caused a sharp market decline while raising heterogeneous responses across companies related to their employees, supply chain, and repurposing of operations to provide needed products and services. We study whether during the 2020 COVID-19 induced market crash, investors differentiated across companies based on their human capital, supply chain, and products and service response. Using data derived from natural language processing applied to news coverage of corporate responses to the coronavirus crisis for 3,023 companies around the world, we find that more positive sentiment around a company’s response is associated with less negative returns. This is especially true for companies with more salient responses and in industries that those responses are more likely to represent a credible commitment to their stakeholders.

Keywords: human capital; supply chain; crisis management; operations; ESG; COVID-19

JEL Classification: M11, M12, M14, M21, M41, M54, G01, G23, G14

Suggested Citation: Suggested Citation

Cheema-Fox, Alexander and LaPerla, Bridget Realmuto and Serafeim, George and Wang, Hui, Corporate Resilience and Response to COVID-19 (September 23, 2020). Journal of Applied Corporate Finance, Volume 33, Number 2, Spring 2021. To access paper, use this link https://onlinelibrary.wiley.com/share/author/YWEAEYPDWUAAPJPMRWGN?target=10.1111/jacf.12457, Available at SSRN: https://ssrn.com/abstract=3578167 or http://dx.doi.org/10.2139/ssrn.3578167