The impact of operating flexibility on firms’ performance during the COVID-19 outbreak: Evidence from China

Hao Liu, Xingjian Yi and Libo Yin ()

Finance Research Letters, 2021, vol. 38, issue C

Abstract: This paper investigates the effect of firm-level operating flexibility on stock performance during the COVID-19 outbreak in China. We find that firm-level operating flexibility is significantly positively correlated with the cumulative abnormal stock returns that occurred during the event window, and this positive relation is more pronounced in firms in the provinces most affected by the epidemic. This positive relation is also more obvious in firms that have relatively fewer fixed assets. Therefore, our results provide direct empirical evidence that the real options embedded in operating flexibility played an important role during the COVID-19 outbreak.

Keywords: Operating Flexibility; COVID-19; Real Options; Event Study (search for similar items in EconPapers)
JEL-codes: G12 G31 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:38:y:2021:i:c:s1544612320316226

DOI: 10.1016/j.frl.2020.101808

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