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COVID-19 and firms' stock price growth: The role of market capitalization

Author

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  • Markus Brueckner
  • Wensheng Kang
  • Joaquin Vespignani

Abstract

This paper studies the role of capitalization on firms' stock price growth in response to new cases of Covid-19 infections in the United States. Controlling for firm and time fixed effects, our panel model estimates show that the effect of new cases of Covid-19 infections on firms' stock price growth is significantly increasing in capitalization: For each one standard deviation increase in capitalization, a one standard deviation increase in new cases of Covid-19 infections increases the weekly growth rate of firms' stock prices by about 0.7 percentage points. Effects of capitalization on the impact that Covid-19 infections have on firms' stock price growth are largest in the travel, tourism, and hospitality sector. Smaller but still positive effects of capitalization are present in the pharmaceutical products, high-tech, and banking and finance sectors.

Suggested Citation

  • Markus Brueckner & Wensheng Kang & Joaquin Vespignani, 2021. "COVID-19 and firms' stock price growth: The role of market capitalization," CAMA Working Papers 2021-100, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
    • Handle: RePEc:een:camaaa:2021-100
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    File URL: https://crawford.anu.edu.au/sites/default/files/2025-08/100_2021_Brueckner_Kang_Vespignani.pdf
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    JEL classification:

    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • E30 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - General (includes Measurement and Data)

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