Corporate immunity, national culture and stock returns: Startups amid the COVID-19 pandemic

Huy Viet Hoang, Cuong Nguyen and Duc Khuong Nguyen

International Review of Financial Analysis, 2022, vol. 79, issue C

Abstract: Small and medium-sized firms, particularly startups, are highly vulnerable to the COVID-19 pandemic because of their financial instability. Using a sample of listed startups across four countries, we investigate whether a startup's built-up capacity pre-COVID-19 can stimulate corporate immunity to endure the impact of the COVID-19 pandemic, reflected via stock performance. We find that the increase in the accumulated COVID-19 confirmed cases worsens stock returns and that the negative effect is alleviated if startups are greater in size as well as have low debt, large board size and CEO duality. Moreover, national cultural dimensions significantly moderate the relationship between stock returns and COVID-19. The COVID-19 negative impact is relieved in societies where people are more collectivistic and cooperative, less tolerant towards uncertainty, and more long-term oriented. Overall, our results support the consolidation of corporate capacities and suggest policymakers consider national culture when formulating COVID-19 or similar infectious pandemic strategies.

Keywords: Corporate immunity; COVID-19; National culture; Startups; Stock returns (search for similar items in EconPapers)
JEL-codes: G3 G41 I10 M13 M14 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finana:v:79:y:2022:i:c:s105752192100291x

DOI: 10.1016/j.irfa.2021.101975

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