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

5 Pages Posted: 5 May 2020

See all articles by Andrew Y. Chen

Andrew Y. Chen

Board of Governors of the Federal Reserve System

Jie Yang

Board of Governors of the Federal Reserve System

Date Written: May 4, 2020

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.

Suggested Citation

Chen, Andrew Y. and Yang, Jie, Financing Concerns in April 2020 Appear Worse Than in 2008 Based on Earnings Calls (May 4, 2020). Available at SSRN: https://ssrn.com/abstract=3592929 or http://dx.doi.org/10.2139/ssrn.3592929

Andrew Y. Chen (Contact Author)

Board of Governors of the Federal Reserve System ( email )

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HOME PAGE: http://sites.google.com/site/chenandrewy/

Jie Yang

Board of Governors of the Federal Reserve System ( email )

20th Street and Constitution Avenue NW
Washington, DC 20551
United States

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