Feverish Stock Price Reactions to COVID-19

58 Pages Posted: 9 Mar 2020 Last revised: 28 May 2020

See all articles by Stefano Ramelli

Stefano Ramelli

University of Zurich - Department of Banking and Finance

Alexander F. Wagner

University of Zurich - Department of Banking and Finance; Centre for Economic Policy Research (CEPR); European Corporate Governance Institute (ECGI); Swiss Finance Institute

Multiple version iconThere are 2 versions of this paper

Date Written: May 27, 2020

Abstract

The market reactions to the 2019 novel Coronavirus disease (COVID-19) provide new insights into how real shocks and financial policies drive firm value. Initially, investors priced negative consequences for internationally-oriented US firms, especially those with China exposure. As the virus spread to Europe and the US, corporate debt and cash holdings emerged as important value drivers, relevant even after the Fed intervened in the bond market. The content and tone of conference calls mirror this development over time. Overall, the results illustrate how the anticipated real effects from the health crisis were amplified through financial channels.

Keywords: Cash holdings, Conference calls, Corporate debt, Coronavirus, COVID-19, Event study, Financial crisis, Global Value Chains, Leverage, Pandemic, SARS-CoV-2, Supply Chains

JEL Classification: G01, G02, G14, G15, F15, F23, F36

Suggested Citation

Ramelli, Stefano and Wagner, Alexander F., Feverish Stock Price Reactions to COVID-19 (May 27, 2020). Swiss Finance Institute Research Paper No. 20-12. Available at SSRN: https://ssrn.com/abstract=3550274 or http://dx.doi.org/10.2139/ssrn.3550274

Stefano Ramelli

University of Zurich - Department of Banking and Finance ( email )

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Alexander F. Wagner (Contact Author)

University of Zurich - Department of Banking and Finance ( email )

Plattenstrasse 14
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Switzerland
+41 44 634 3963 (Phone)

Centre for Economic Policy Research (CEPR) ( email )

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European Corporate Governance Institute (ECGI) ( email )

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Swiss Finance Institute ( email )

Switzerland

HOME PAGE: http://www.alex-wagner.com

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