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Corporate shutdowns in the time of Covid-19

Author

Listed:
  • Bindal, Shradha
  • Joseph, Kissan
  • Meschke, Felix

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.

Suggested Citation

  • Bindal, Shradha & Joseph, Kissan & Meschke, Felix, 2025. "Corporate shutdowns in the time of Covid-19," Journal of Corporate Finance, Elsevier, vol. 92(C).
    • Handle: RePEc:eee:corfin:v:92:y:2025:i:c:s0929119925000343
    DOI: 10.1016/j.jcorpfin.2025.102766
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    More about this item

    Keywords

    Covid-19; Corporate headquarters shutdown; S&P 500 firms; Financial flexibility; CEO characteristics; Corporate political donations; Mobile phone location data;
    All these keywords.

    JEL classification:

    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation
    • J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods
    • K20 - Law and Economics - - Regulation and Business Law - - - General

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