The COVID-19 Shock and Equity Shortfall: Firm-level Evidence from Italy

Elena Carletti, Tommaso Oliviero (), Marco Pagano, Loriana Pelizzon () and Marti G. Subrahmanyam
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Elena Carletti: Università Bocconi and CEPR
Marti G. Subrahmanyam: Stern School of Business, New York University

CSEF Working Papers from Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy

Abstract: We forecast the drop in profits and the equity shortfall triggered by the COVID-19 lockdown, using a representative sample of 80,972 Italian firms. A 3-month lockdown entails an aggregate yearly drop in profits of about 10% of GDP and results in financial distress for 17% of the sample firms, employing 8.8% of the sample employees. Distress is more frequent for small and medium-sized enterprises, for firms with high pre-COVID-19 leverage, and those belonging to the Manufacturing and Wholesale Trading sectors. Listed companies are less likely to enter distress, while there is no clear correlation between distress rates and family firm ownership.

Keywords: COVID-19; pandemics; losses; distress; equity; recapitalization. (search for similar items in EconPapers)
JEL-codes: G01 G32 G33 (search for similar items in EconPapers)
Date: 2020-05-28, Revised 2020-07-20
New Economics Papers: this item is included in nep-cfn, nep-ent, nep-eur, nep-rmg and nep-sbm
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Citations: View citations in EconPapers (73)

Forthcoming in the Review of Corporate Finance Studies

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Related works:
Journal Article: The COVID-19 Shock and Equity Shortfall: Firm-Level Evidence from Italy (2020)
Working Paper: The COVID-19 Shock and Equity Shortfall: Firm-level Evidence from Italy (2020)
Working Paper: The COVID-19 Shock and Equity Shortfall: Firm-level Evidence from Italy (2020)
Working Paper: The COVID-19 Shock and Equity Shortfall: Firm-level Evidence from Italy (2020)
Working Paper: The COVID-19 shock and equity shortfall: Firm-level evidence from Italy (2020)
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