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Pandemics and firms: Drawing lessons from history
Author(s) -
Cevik Serhan,
Miryugin Fedor
Publication year - 2021
Publication title -
international finance
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.458
H-Index - 39
eISSN - 1468-2362
pISSN - 1367-0271
DOI - 10.1111/infi.12392
Subject(s) - pandemic , covid-19 , outbreak , business , economics , infectious disease (medical specialty) , population , demographic economics , scale (ratio) , development economics , monetary economics , geography , disease , demography , medicine , pathology , virology , sociology , cartography
Abstract The COVID‐19 pandemic caused an unprecedented and synchronized contraction in the global economy. To assess the likely evolution of firm performance going forward, this paper investigates empirically the impact of past pandemics using firm‐level data on more than 537,000 nonfinancial companies from 14 developing countries during the period 1998–2018. The analysis indicates that the prevalence of infectious diseases has an economically and statistically significant negative effect on nonfinancial corporate performance. This adverse impact is particularly pronounced on smaller and younger firms, compared to larger and more established corporations. We also find that a higher number of infectious‐disease cases in the population increases the probability of failure among nonfinancial firms, particularly for small and young firms. In the case of COVID‐19, the magnitude of these effects will be much greater, given the unprecedented scale of the outbreak and strict policy responses to contain its spread.