Sentiment and firm behavior during the COVID-19 pandemic

Lukas Buchheim, Jonas Dovern, Carla Krolage and Sebastian Link

Journal of Economic Behavior & Organization, 2022, vol. 195, issue C, 186-198

Abstract: How did optimism or pessimism about the duration of shutdowns during the COVID-19 pandemic affect firms’ business outlook and behavior? In a large panel of German firms, we identify sentiment as the only plausible determinant of the cross-sectional variation in the expected shutdown length because this variation is uncorrelated with fundamentals. Firms incorporate this sentiment regarding the shutdown duration in their more general business outlook. Sentiment was also an important determinant of firms’ crisis response: More pessimistic firms—those that perceived the shutdown to last longer—were more likely to implement strong measures like layoffs or canceling investments. The implementation of soft measures, e.g., working from home, was unrelated to the sentiment regarding the shutdown length.

Keywords: Sentiment; Firm behavior; COVID-19; Shutdown; Employment; Investment (search for similar items in EconPapers)
JEL-codes: D22 D84 E22 E24 H32 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (21)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0167268122000178
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:jeborg:v:195:y:2022:i:c:p:186-198

DOI: 10.1016/j.jebo.2022.01.011

Access Statistics for this article

Journal of Economic Behavior & Organization is currently edited by Houser, D. and Puzzello, D.

More articles in Journal of Economic Behavior & Organization from Elsevier
Bibliographic data for series maintained by Catherine Liu ().