Firm Finances and the Spread of COVID-19: Evidence from Nursing Homes

51 Pages Posted: 4 Aug 2020 Last revised: 1 Jul 2021

See all articles by Taylor A. Begley

Taylor A. Begley

Washington University in St. Louis - John M. Olin Business School

Daniel Weagley

Georgia Institute of Technology - Scheller College of Business

Date Written: June 30, 2021

Abstract

We find that firms’ financial resources play an important role in mitigating the spread of COVID-19. We study nursing homes – whose residents account for over one-third of all U.S. COVID-19 deaths – at a time when investment in risk mitigation was costly and critical. We find that facilities with less liquidity and those experiencing more severe cash flow shocks had a higher likelihood of COVID-19 reaching residents. These patterns are strongest for financially constrained facilities. We also find higher rates of transmission between staff and residents within liquidity-constrained facilities, which is consistent with these facilities creating a less-effective barrier between groups.

Keywords: COVID-19, financial constraints, stakeholder welfare

JEL Classification: G00, G30, I1, I10

Suggested Citation

Begley, Taylor A. and Weagley, Daniel, Firm Finances and the Spread of COVID-19: Evidence from Nursing Homes (June 30, 2021). Georgia Tech Scheller College of Business Research Paper No. 3659480, Available at SSRN: https://ssrn.com/abstract=3659480 or http://dx.doi.org/10.2139/ssrn.3659480

Taylor A. Begley (Contact Author)

Washington University in St. Louis - John M. Olin Business School ( email )

One Brookings Drive
Campus Box 1133
St. Louis, MO 63130-4899
United States

HOME PAGE: http://www.taylorbegley.com

Daniel Weagley

Georgia Institute of Technology - Scheller College of Business ( email )

800 West Peachtree St.
Atlanta, GA 30308
United States
(404) 385-3015 (Phone)

HOME PAGE: http://www.danielweagley.com

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