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Corporate Immunity to the COVID-19 Pandemic

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  • Wenzhi Ding
  • Ross Levine
  • Chen Lin
  • Wensi Xie

Abstract

Using data on over 6,000 firms across 56 economies during the first quarter of 2020, we evaluate the connection between corporate characteristics and stock price reactions to COVID-19 cases. We find that the pandemic-induced drop in stock prices was milder among firms with (a) stronger pre-2020 finances (more cash, less debt, and larger profits), (b) less exposure to COVID-19 through global supply chains and customer locations, (c) more CSR activities, and (d) less entrenched executives. Furthermore, the stock prices of firms with greater hedge fund ownership performed worse, and those of firms with larger non-financial corporate ownership performed better. We believe ours is the first paper to assess international, cross-firm stock price reactions to COVID-19 as functions of these pre-shock corporate characteristics.

Suggested Citation

  • Wenzhi Ding & Ross Levine & Chen Lin & Wensi Xie, 2020. "Corporate Immunity to the COVID-19 Pandemic," NBER Working Papers 27055, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:27055
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    JEL classification:

    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • G3 - Financial Economics - - Corporate Finance and Governance
    • I10 - Health, Education, and Welfare - - Health - - - General
    • M12 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Personnel Management; Executives; Executive Compensation
    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility

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