Were Stay-at-Home Orders During Covid-19 Harmful for Business? The Market’s View
30 Pages Posted: 4 Aug 2020
Date Written: July 25, 2020
We study the market reactions following staggered implementations of lockdowns across U.S. states during Covid-19. We find that returns on firms located in lockdown states are higher following the lockdown. We interpret these market reactions as reflecting updated beliefs of market participants in the light of events that follow the lockdowns, such as compliance with stay-at-home orders. The effect is (a) concentrated among counties with a high number of infections, (b) larger for firms in essential industries, and (c) larger for Democratic states. These findings suggest that the market perceives Non-Pharmaceutical Interventions, when effective, to be beneficial for businesses.
Keywords: Stock Market Reaction, Lockdown, COVID-19, Non-Pharmaceutical Interventions
JEL Classification: G10, G14, G18, I18
Suggested Citation: Suggested Citation