Corporate Shutdowns in the Time of Covid-19

Abstract

This study examines the factors driving corporate headquarters shutdown decisions among S&P 500 firms during the early months of the Covid-19 pandemic. Using mobile phone data to estimate shutdown timing, we find that financial flexibility and CEO characteristics, such as pay duration, overconfidence, power, age or gender, do not influence shutdown decisions. Instead, work-from-home adaptability, local shelter-in-place mandates, and political alignment emerge as critical drivers. Democratic-leaning firms, particularly those led by Democratic-leaning CEOs, shut down significantly earlier than their counterparts. These findings highlight the importance of political and regulatory dynamics in shaping corporate responses during crises.

Keywords: corporate headquarters shutdown, S&P 500 firms, financial flexibility, CEO characteristics, corporate political donations, mobile phone location data, Covid-19