Financing Concerns in April 2020 Appear Worse Than in 2008 Based on Earnings Calls

Abstract

Corporate financing conditions have been rapidly evolving during the COVID-19 outbreak. In this short note, we report a timely measure of financing conditions obtained from machine-reading of earnings conference call transcripts. We find that actions consistent with financial concerns spiked dramatically in April 2020. The share of firms drawing down on credit lines, cutting equity payout, or cutting investment was 17, 27, and 42 percent, more than 6.5 standard deviations from their mean values of 2, 5, and 10 percent. For comparison, during the peak of the 2008-2009 financial crises these numbers peaked at 7, 11, and 25 percent. Consistent with the preliminary findings of Hassan, Hollander, van Lent, and Tahoun (2020), we find little evidence of financing concerns between January and March 2020.