Feverish Stock Price Reactions to COVID-19
58 Pages Posted: 9 Mar 2020 Last revised: 28 May 2020
Date Written: May 27, 2020
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: Suggested Citation