 Trust and the stock market reaction to lockdown and reopening announcements: A cross-country evidenceLijuan Xie, Mei Wang and Toan Luu Duc Huynh Finance Research Letters, 2022, vol. 46, issue PA Abstract: We conduct a country-level analysis with a sample of 44 countries to examine whether generalised social trust has an impact on the stock market reaction to government announcements of lockdown and reopening during the COVID-19 pandemic. We first conduct an event study to measure the global stock markets’ reaction to government announcements of lockdown and reopening, which is measured by each stock market's cumulative abnormal return. We then employ regression analysis to investigate the relationship between generalised social trust and the stock markets’ reaction to government announcements of lockdown and reopening. The results show that government announcement of lockdown had a significant negative influence on most of the stock markets, whereas the magnitude of the stock markets’ reaction to government announcement of reopening is relatively marginal, indicating a possible negative bias. Moreover, we find that generalised social trust is positively related to the stock markets’ reaction to government announcement of lockdown and negatively related to the stock markets’ reaction to government announcement of reopening. Keywords: COVID-19; Stock market reactions; Generalized social trust (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:46:y:2022:i:pa:s1544612321003640 DOI: 10.1016/j.frl.2021.102361 Access Statistics for this article Finance Research Letters is currently edited by R. Gençay More articles in Finance Research Letters from Elsevier |
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