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Covid-19 and firms' stock price growth: the role of market capitalization

Citation

Brueckner, M and Kang, W and Vespignani, J, Covid-19 and firms' stock price growth: the role of market capitalization, Applied Economics pp. 1-17. ISSN 0003-6846 (2023) [Refereed Article]


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DOI: doi:10.1080/00036846.2022.2129575

Abstract

This paper studies the role of capitalization on firmsí stock price growth in response to new cases of Covid-19 infections in the United States. Controlling for firm and time fixed effects, our panel model estimates show that the effect of new cases of Covid-19 infections on firmsí stock price growth is significantly increasing in capitalization: For each one standard deviation increase in capitalization, a one standard deviation increase in new cases of Covid-19 infections increases the weekly growth rate of firmsí stock prices by about 0.7% points. Effects of capitalization on the impact that Covid-19 infections have on firmsí stock price growth are largest in the travel, tourism, and hospitality sector. Smaller but still positive effects of capitalization are present in the pharmaceutical products, high-tech, and banking and finance sectors. The results are robust to controlling firmsí elasticity of demand, productivity, financial constraints, managerial compensations, and aggregate money growth and economic activity.

Item Details

Item Type:Refereed Article
Keywords:Covid-19, U.S. stock market, performance of firms, stock market capitalization
Research Division:Economics
Research Group:Applied economics
Research Field:Macroeconomics (incl. monetary and fiscal theory)
Objective Division:Economic Framework
Objective Group:Macroeconomics
Objective Field:Macroeconomics not elsewhere classified
UTAS Author:Vespignani, J (Associate Professor Joaquin Vespignani)
ID Code:154440
Year Published:2023 (online first 2022)
Deposited By:Finance
Deposited On:2022-11-30
Last Modified:2023-01-06
Downloads:0

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