Covid-19 and Firms’ Stock Price Growth: The Role of Market Capitalization

Markus Brueckner, Wensheng Kang and Joaquin Vespignani
Authors registered in the RePEc Author Service: Markus Brueckner

ANU Working Papers in Economics and Econometrics from Australian National University, College of Business and Economics, School of Economics

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.

Keywords: Covid-19; performance of firms; stock market capitalization; U.S. stock market (search for similar items in EconPapers)
JEL-codes: E30 G10 (search for similar items in EconPapers)
Date: 2021-12
New Economics Papers: this item is included in nep-fdg and nep-mac
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Persistent link: https://EconPapers.repec.org/RePEc:acb:cbeeco:2021-683

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