COVID-19, Firm Exposure, and Firm Value: A Tale of Two Lockdowns

25 Pages Posted: 15 Apr 2020

See all articles by Haoyuan Ding

Haoyuan Ding

Shanghai University of Finance and Economics - School of International Business Administration

Haichao Fan

Fudan University - School of Economics

Shu Lin

Department of Economics, The Chinese University of Hong Kong

Date Written: April 13, 2020

Abstract

We examine the stock market responses to two symbolic events in the outbreak of COVID-19:

(1) the lockdown of Hubei province; and

(2) the containment of the disease in China and its spread to overseas.

Overall, market in China responded negatively (positively) to the first (second) event. Regression analysis reveals that, following the first event, firms with Hubei exposures earned significantly lower returns while those with foreign exposures earned significantly higher returns. Foreign exposures, however, had significantly negative effects on returns following the second event. The valuation effects of Hubei and foreign exposures also vary across firm ownership and industries.

Keywords: COVID-19, Foreign Exposure, Internal Network, Input-Output Linkage

JEL Classification: F20, F14, I10

Suggested Citation

Ding, Haoyuan and Fan, Haichao and Lin, Shu, COVID-19, Firm Exposure, and Firm Value: A Tale of Two Lockdowns (April 13, 2020). Available at SSRN: https://ssrn.com/abstract=3574401 or http://dx.doi.org/10.2139/ssrn.3574401

Haoyuan Ding

Shanghai University of Finance and Economics - School of International Business Administration ( email )

777 Guo-ding Road
Shanghai, 200433
China

Haichao Fan

Fudan University - School of Economics ( email )

600 GuoQuan Road
Shanghai, 200433
China

Shu Lin (Contact Author)

Department of Economics, The Chinese University of Hong Kong ( email )

Department of Economics
The Chinese University of Hong Kong
Shatin, N.T., 200433
Hong Kong

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