Open AccessFeverish Stock Price Reactions to COVID-19*
Author(s) -
Stefano Ramelli,
Alexander F. Wagner
Publication year - 2020
Publication title -
the review of corporate finance studies
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 4.292
H-Index - 14
eISSN - 2046-9136
pISSN - 2046-9128
DOI - 10.1093/rcfs/cfaa012
Subject(s) - covid-19 , debt , bond , value (mathematics) , financial system , business , china , tone (literature) , economics , the internet , stock (firearms) , monetary economics , financial economics , finance , political science , infectious disease (medical specialty) , disease , engineering , biology , medicine , art , law , literature , virology , outbreak , computer science , world wide web , machine learning , mechanical engineering
Market reactions to the 2019 novel coronavirus disease (COVID-19) provide new insights into how real shocks and financial policies drive firm value. Initially, internationally oriented firms, especially those more exposed to trade with China, underperformed. As the virus spread to Europe and the United States, corporate debt and cash holdings emerged as important value drivers, relevant even after the Fed intervened in the bond market. The content and tone of conference calls mirror this development over time. Overall, the results illustrate how anticipated real effects from the health crisis, a rare disaster, were amplified through financial channels. (JEL G01, G12, G14, G32, F14) Received: May 27, 2020; editorial decision June 16, 2020 by Editor Andrew Ellul. Authors have furnished an Internet Appendix, which is available on the Oxford University Press Web site next to the link to the final published paper online.
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