This Time is Indeed Different: A Study on Global Market Reactions to Public Health Crisis

Posted: 19 Apr 2020

See all articles by Daniel Schell

Daniel Schell

WHU - Otto Beisheim School of Management

Mei Wang

WHU - Otto Beisheim School of Management

Toan Luu Duc Huynh

Ho Chi Minh City University of Economics and Finance; WHU - Otto Beisheim School of Management

Date Written: April 16, 2020

Abstract

This paper studies the differences in stock market reaction to the same kind of disease-related news by analyzing abnormal returns of global stock markets during Public Health Risk Emergency of International Concern (PHEIC) announcements. Drawing the data from 26 stock market indices over the period from 22 April 2008 to 12 March 2020, we compare stock market reactions to all six PHEIC announcements made by World Health Organization since 2009. Although the PHEIC announcements can be categorized as the same type of event, we found no consistent patterns in the market reactions to PHEIC announcements. The markets did not show significant reactions in a 30-day event window, which suggests a relatively low economic impact of the diseases on a global scale, except for Covid-19. Among all diseases included in our study, only Covid-19 had a significant negative effect on stock markets at least lasting 30 days.

Keywords: Market Reaction; Pandemic; COVID-19; Public Health Emergency Of International Concern

JEL Classification: G15, G41

Suggested Citation

Schell, Daniel and Wang, Mei and Huynh, Toan Luu Duc, This Time is Indeed Different: A Study on Global Market Reactions to Public Health Crisis (April 16, 2020). Available at SSRN: https://ssrn.com/abstract=3577418

Daniel Schell

WHU - Otto Beisheim School of Management ( email )

Burgplatz 2
Vallendar, 56179
Germany

Mei Wang

WHU - Otto Beisheim School of Management ( email )

Burgplatz 2
Vallender, 56179
Germany

Toan Luu Duc Huynh (Contact Author)

Ho Chi Minh City University of Economics and Finance ( email )

59C Nguyen Dình Chieu
6th Ward, District 3
Ho Chi Minh City, Ho Chi Minh 70000
Vietnam

WHU - Otto Beisheim School of Management ( email )

Burgplatz 2
Vallendar, 56179
Germany

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