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Corporate immunity, national culture and stock returns: Startups amid the COVID-19 pandemic

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  • Hoang, Huy Viet
  • Nguyen, Cuong
  • Nguyen, Duc Khuong

Abstract

Small and medium-sized firms, particularly startups, are highly vulnerable to the COVID-19 pandemic because of their financial instability. Using a sample of listed startups across four countries, we investigate whether a startup's built-up capacity pre-COVID-19 can stimulate corporate immunity to endure the impact of the COVID-19 pandemic, reflected via stock performance. We find that the increase in the accumulated COVID-19 confirmed cases worsens stock returns and that the negative effect is alleviated if startups are greater in size as well as have low debt, large board size and CEO duality. Moreover, national cultural dimensions significantly moderate the relationship between stock returns and COVID-19. The COVID-19 negative impact is relieved in societies where people are more collectivistic and cooperative, less tolerant towards uncertainty, and more long-term oriented. Overall, our results support the consolidation of corporate capacities and suggest policymakers consider national culture when formulating COVID-19 or similar infectious pandemic strategies.

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  • Hoang, Huy Viet & Nguyen, Cuong & Nguyen, Duc Khuong, 2022. "Corporate immunity, national culture and stock returns: Startups amid the COVID-19 pandemic," International Review of Financial Analysis, Elsevier, vol. 79(C).
    • Handle: RePEc:eee:finana:v:79:y:2022:i:c:s105752192100291x
    DOI: 10.1016/j.irfa.2021.101975
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    More about this item

    Keywords

    Corporate immunity; COVID-19; National culture; Startups; Stock returns;
    All these keywords.

    JEL classification:

    • G3 - Financial Economics - - Corporate Finance and Governance
    • G41 - Financial Economics - - Behavioral Finance - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making in Financial Markets
    • I10 - Health, Education, and Welfare - - Health - - - General
    • M13 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - New Firms; Startups
    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility

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