Pandemics, Intermediate Goods, and Corporate Valuation

Luc Laeven

No 15022, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We evaluate the role of input-output linkages and social distancing in transmitting the COVID-19 shock to the valuation of U.S. corporates. Using a new dataset on sectoral dependence on the use and sale of intermediate goods, we find that firms that depend on the sale of intermediate goods to sectors affected by social distancing are more affected by the crisis. We estimate that the indirect effect of social distancing through input-output linkages is at least as important as its direct effect. Several tests are consistent with the view that larger firms and firms with cash buffers are better able to absorb the pandemic shock.

Keywords: Valuation; Liquidity; Cash; Intermediate goods; Pandemic (search for similar items in EconPapers)
JEL-codes: D22 D57 G01 G32 (search for similar items in EconPapers)
Date: 2020-07
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Citations: View citations in EconPapers (8)

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