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Covid-19 and firms' stock price growth: the role of market capitalization
journal contribution
posted on 2023-05-21, 15:11 authored by Brueckner, M, Kang, W, Joaquin VespignaniJoaquin VespignaniThis 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% 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. The results are robust to controlling firms’ elasticity of demand, productivity, financial constraints, managerial compensations, and aggregate money growth and economic activity.
History
Publication title
Applied EconomicsPagination
1-17ISSN
0003-6846Department/School
TSBEPublisher
RoutledgePlace of publication
4 Park Square, Milton Park, Abingdon, England, Oxfordshire, Ox14 4RnRights statement
© 2022 Informa UK Limited, trading as Taylor & Francis Group.Repository Status
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