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The Impact of the Corona Crisis on the Worldwide Stock Markets: An Empirical Analysis with Cross National Event Study Approach

Author

Listed:
  • Annika Fischer

    (Department of Finance, Faculty of Economics and Administration, Masaryk University, Lipov 41a, 60200 Brno, Czech Republic)

  • Noel Opala

    (Department of Finance, Faculty of Economics and Administration, Masaryk University, Lipov 41a, 60200 Brno, Czech Republic,)

  • Svend Reuse

    (FOM University of Applied Sciences, ISF Institute for Strategic Finance, Germany)

  • Martin Svoboda

    (Department of Financial Law and Economics, Faculty of Law, Masaryk University Vever 70, 611 80 Brno, Czech Republic.)

Abstract

The Corona Crisis led to a high drawdown in the stock markets in the whole world in March 2020. After that, infection rates, incidences, and dead people were published by many countries. Based on 11 stock price indices analyses according to volatility and correlation, we can conclude that only one event seems to be substantially affected by a Corona-related event not tied to specific countries. Therefore, in times of crisis, stock indices correlate highly positively. This leads us to a second step to our central research question: Do Corona dates significantly impact the stock price development? Therefore, we analyzed several events in Germany and the US with the event study approach. The main result is that only the March 2020 event significantly impacts the volatility and the returns. The following bad news but also the good news do not have any influence on the share prices and do not lead to abnormal returns. For example, the first approval of vaccinations had no apparent effect on the stock market, which was reflected in price movements comparable to those during the initial Lockdown.

Suggested Citation

  • Annika Fischer & Noel Opala & Svend Reuse & Martin Svoboda, 2022. "The Impact of the Corona Crisis on the Worldwide Stock Markets: An Empirical Analysis with Cross National Event Study Approach," International Journal of Economics and Financial Issues, Econjournals, vol. 12(6), pages 162-172, November.
    • Handle: RePEc:eco:journ1:2022-06-18
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    References listed on IDEAS

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    More about this item

    Keywords

    Covid-19; event study; abnormal returns; volatility; correlation;
    All these keywords.

    JEL classification:

    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading

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