COVID-19, firm exposure, and firm value: A tale of two lockdowns

Haoyuan Ding, Haichao Fan and Shu Lin

China Economic Review, 2022, vol. 71, issue C

Abstract: We study how a public health crisis affects the corporate sector at different phases of outbreak. Using an event study approach, we find significant valuation effects in a sample of Chinese listed firms following two symbolic events in the outbreak of COVID-19: (1) the lockdown of Hubei province; and (2) the containment of the disease in China and its spread to overseas. Market responded negatively (positively) to the first (second) event. Regression analysis further reveals that, following the first event, firms with Hubei (foreign) exposures earned significantly lower (higher) returns. Foreign exposures, however, had significantly negative effects on returns following the second event. The valuation effects of Hubei and foreign exposures also vary across firm ownership and industries. Our results indicate that, in a globalized world, firms' international status, internal networks and input-output linkages all play important roles in determining their exposures to the pandemic.

Keywords: Covid-19; Firm exposures; Valuation effect; China (search for similar items in EconPapers)
JEL-codes: F1 G3 I1 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (11)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:chieco:v:71:y:2022:i:c:s1043951x21001395

DOI: 10.1016/j.chieco.2021.101721

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