Pandemics, Intermediate Goods, and Corporate Valuation

46 Pages Posted: 28 Jul 2020 Last revised: 16 Aug 2020

See all articles by Luc Laeven

Luc Laeven

European Central Bank (ECB); Centre for Economic Policy Research (CEPR)

Date Written: July 2020


We evaluate the role of input-output linkages and social distancing in transmitting the COVID-19 shock to the valuation of U.S. corporates. Using a new dataset on sectoral dependence on the use and sale of intermediate goods, we find that firms that depend on the sale of intermediate goods to sectors affected by social distancing are more affected by the crisis. We estimate that the indirect effect of social distancing through input-output linkages is at least as important as its direct effect. Several tests are consistent with the view that larger firms and firms with cash buffers are better able to absorb the pandemic shock.

Keywords: cash, Intermediate goods, liquidity, Pandemic, Valuation

JEL Classification: D22, D57, G01, G32

Suggested Citation

Laeven, Luc A., Pandemics, Intermediate Goods, and Corporate Valuation (July 2020). CEPR Discussion Paper No. DP15022, Available at SSRN:

Luc A. Laeven (Contact Author)

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314

Centre for Economic Policy Research (CEPR)

United Kingdom

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