Feverish Stock Price Reactions to COVID-19

55 Pages Posted: 9 Mar 2020 Last revised: 30 Apr 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: April 21, 2020

Abstract

The market reactions to the 2019 novel Coronavirus disease (COVID-19) shed light on the importance of international trade and financial policies for 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, markets moved feverishly. 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 health crisis morphed into an economic crisis 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 (April 21, 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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Zürich, 8032
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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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Belgium

Swiss Finance Institute ( email )

Switzerland

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

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