Product line transformation, foreign sales, and firm value: Evidence from COVID-19 pandemic governance in urban China

Liangliang Wang, Junli Yu and Kam C. Chan

Research in International Business and Finance, 2021, vol. 58, issue C

Abstract: Using a sample of Chinese firms, we examine stock market reaction to firms that announce a change in their product lines to those related to COVID-19 management (medical masks and ventilators, among others). We find the market reacts positively to the announcements. In addition, when a firm ordinarily has a large share of export sales, the stock market reaction is more salient, indicating that export sales provide a certification effect that positively signals investors. Additional analysis on moderating effects suggest that, conditional on foreign sales, prior experience with medical product lines or less uncertainty about supply availability enhances the cumulative announcement returns (CARs), while the adverse impact of firm size on CAR magnifies.

Keywords: COVID-19; Product line transformation; Announcement effect; Urban governance (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:riibaf:v:58:y:2021:i:c:s0275531921001082

DOI: 10.1016/j.ribaf.2021.101487

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