Does Absorptive Capacity Protect Shareholder Wealth in Times of Crisis? Evidence from the COVID-19 Pandemic

Amanjot Singh ()
Additional contact information
Amanjot Singh: King’s University College at the University of Western Ontario

American Business Review, 2022, vol. 25, issue 1, 83-91

Abstract: R&D capital increases firms’ ability to identify, absorb, and utilize new external information. Firms with absorptive capacity become resilient to external shocks while providing an opportunity to protect shareholder wealth during a crisis period. This study examines the role of firms’ absorptive capacity in protecting shareholder wealth around the COVID-19-induced stock market crisis. Our findings report that firms’ absorptive capacity is positively related to stock returns of US firms during the COVID-19 pandemic. This positive relationship exists irrespective of investor attention and is robust to the propensity-score-matching approach. Overall, the results imply that R&D capital makes firms resilient to external shocks.

Keywords: Absorptive Capacity; COVID-19; Stock Returns (search for similar items in EconPapers)
JEL-codes: G10 G32 (search for similar items in EconPapers)
Date: 2022
References: Add references at CitEc
Citations:

Downloads: (external link)
https://digitalcommons.newhaven.edu/americanbusinessreview/vol25/iss1/6/ Full text (application/pdf)

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:ris:ambsrv:0050

Access Statistics for this article

American Business Review is currently edited by Kamal Upadhyaya and Subroto Roy

More articles in American Business Review from Pompea College of Business, University of New Haven Contact information at EDIRC.
Bibliographic data for series maintained by Amber Montano ().