The value of communication during pandemics

Qingfu Liu, Chen Shi, Yiuman Tse and Chuanjie Wang

Pacific-Basin Finance Journal, 2023, vol. 82, issue C

Abstract: Using natural language processing (NLP) techniques to analyze the leading newspapers in China, we develop a novel measure, a pandemic intensity index. We show that firms with more investor communication have significantly higher market value during the multiple pandemic outbreaks over the period 2013 to 2021. Investor communication works primarily through alleviating information asymmetry between firms and investors and raising a firm's profile with market participants during pandemics. Our results provide support for the hypothesis that investor communication acts as a consoler, which helps firms prevail under unexpected conditions. Positive textual sentiment enhances the communication effect. We conclude that firms should enhance communication with investors and reassure them during turbulent times, especially in response to uncertainty.

Keywords: Information asymmetry; Investor communication; NLP techniques; Pandemic intensity index (search for similar items in EconPapers)
JEL-codes: G14 G32 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:pacfin:v:82:y:2023:i:c:s0927538x23002305

DOI: 10.1016/j.pacfin.2023.102159

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