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Learning financial survival from disasters

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  • Kemal Tosun, Onur
  • Eshraghi, Arman
  • Muradoglu, Gulnur

Abstract

This study examines how firms learn financial survival from experience, and how stock markets price this learning. We study American firms during the Covid turmoil which had prior exposure to the 2008 Global Financial Crisis. Our results show firms exposed to the 2008 Crisis had 95% higher monthly stock returns during Covid compared to their unexposed peers. This highlights the role major crises play in shaping organisational resilience. The organisational learning we illustrate includes a strong element of CEO learning but is not exclusive to senior management. Our empirical findings are stronger for firms in ‘shutdown sectors’ and persist after controlling for state interventions, as well as other control factors and estimation windows.

Suggested Citation

  • Kemal Tosun, Onur & Eshraghi, Arman & Muradoglu, Gulnur, 2023. "Learning financial survival from disasters," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 85(C).
    • Handle: RePEc:eee:intfin:v:85:y:2023:i:c:s104244312300046x
    DOI: 10.1016/j.intfin.2023.101778
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    More about this item

    Keywords

    Financial Markets; Covid-19 Crisis; 2008 Financial Crisis; Firm Behaviour;
    All these keywords.

    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • L20 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - General

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