Corporate Immunity to the COVID-19 Pandemic

77 Pages Posted: 17 Apr 2020 Last revised: 28 Aug 2021

See all articles by Wenzhi Ding

Wenzhi Ding

The University of Hong Kong - Faculty of Business and Economics

Ross Levine

University of California, Berkeley - Haas School of Business; National Bureau of Economic Research (NBER)

Chen Lin

The University of Hong Kong - Faculty of Business and Economics

Wensi Xie

The Chinese University of Hong Kong (CUHK) - CUHK Business School

Multiple version iconThere are 2 versions of this paper

Date Written: August 10, 2020

Abstract

We evaluate the connection between corporate characteristics and the reaction of stock returns to COVID-19 cases using data on over 6,700 firms across 61 economies. The pandemic-induced drop in stock returns was milder among firms with (a) stronger pre-2020 finances (more cash and undrawn credit, less total and short-term debt, and larger profits), (b) less exposure to COVID-19 through global supply chains and customer locations, (c) more CSR activities, and (d) less entrenched executives. Furthermore, the stock returns of firms controlled by families (especially through direct holdings and with non-family managers), large corporations, and governments performed better, and those with greater ownership by hedge funds and other asset management companies performed worse. Stock markets positively price small amounts of managerial ownership but negatively price high-levels of managerial ownership during the pandemic.

Keywords: Corporate Resilience; COVID-19; Financial Risk; Supply Chain; CSR; Ownership; Governance; Entrenchment

JEL Classification: G3; F23; I10; M12; M14

Suggested Citation

Ding, Wenzhi and Levine, Ross Eric and Lin, Chen and Xie, Wensi, Corporate Immunity to the COVID-19 Pandemic (August 10, 2020). Journal of Financial Economics (JFE), Forthcoming, Available at SSRN: https://ssrn.com/abstract=3578585 or http://dx.doi.org/10.2139/ssrn.3578585

Wenzhi Ding

The University of Hong Kong - Faculty of Business and Economics ( email )

Pokfulam Road
Hong Kong SAR
China

Ross Eric Levine (Contact Author)

University of California, Berkeley - Haas School of Business ( email )

545 Student Services Building, #1900
2220 Piedmont Avenue
Berkeley, CA 94720
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Chen Lin

The University of Hong Kong - Faculty of Business and Economics ( email )

Pokfulam Road
Hong Kong
China

Wensi Xie

The Chinese University of Hong Kong (CUHK) - CUHK Business School ( email )

Cheng Yu Tung Building
12 Chak Cheung Street
Shatin, N.T.
Hong Kong

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