COVID-19 Pandemic and firm-level dynamics in the USA, UK, Europe, and Japan

Ahmad, Wasim; Kutan, Ali M.; Chahal, Rishman Jot Kaur; Kattumuri, Ruth

doi:10.1016/j.irfa.2021.101888

Cited by 21 publications

(15 citation statements)

References 48 publications

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“…We find that a rise in the stringency of government measures results in higher volatility in the stock prices of Indian tourism firms. These findings draw support from the results of Ahmad et al (2021) with respect to Europe and Japan but not with respect to USA and UK Our results contradict the findings of Huang et al (2021), who show that COVID-19 restrictions resulted in higher stock price returns and lower systematic risk among the top brands in USA Our results for Indian tourism firms suggest otherwise. Nonetheless, they find support from the results of Ahmad et al (2021) and Huang et al (2021) for other nations, including Japan and Europe [12].…”

Section: Robustness Checksupporting

confidence: 68%

“…The current issue and full text archive of this journal is available on Emerald Insight at: https://www.emerald.com/insight/1746-8809.htm More importantly, the impact of the pandemic varied considerably across countries (Ahmad et al, 2021) and industries (Pandey and Kumar, 2022) impacting various service industries unequally (Lin and Falk, 2022). Of all sectors within an economy, tourism is known to be the worst affected in the aftermath of the COVID-19 pandemic (Carter et al, 2022;Nicola et al, 2020;Pandey and Kumar, 2022) resulting in the underperformance of these firms.…”

Section: Covid-19 and Stock Volatility 1563mentioning

confidence: 99%

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COVID-19, firm characteristics and stock volatility: new evidence from the Indian tourism sector

Khanna

Sharma²,

Pant³

2022

IJOEM

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PurposeThis paper provides new evidence on Indian tourism firms by investigating the role of a firm's financial conditions typified by its leverage, earnings, size, cash holdings, and excess cash in moderating the pandemic-led idiosyncratic volatility in its stock prices.Design/methodology/approachThe authors employ a firm-level panel comprising 82 publicly-listed tourism firms from India. Firm risk is estimated for the period beginning January 2020 to December 2020.FindingsThis paper finds non-linear effects of the pandemic on the idiosyncratic risk of the sample firms. Precisely, stock price volatility rises, but as the market absorbs this information, volatility subsides even as the disease spreads further. Further, lower levels of past debt and earnings and higher cash holdings ameliorate the pandemic's effects on tourism firms' risk. Contrasting the view that “excess” cash reflects poor operational performance, we show that “excess” cash firms are better prepared to face the adverse effects of the pandemic.Research limitations/implicationsThis study’s sample period fully encompasses the first wave of the pandemic (January–December 2020) of the novel coronavirus infection spread.Originality/valueTo the best of the authors’ knowledge, this is the first study to assess the moderating effects of company fundamentals on the risk of Indian tourism firms. In doing so, the authors account for non-linear effects of the pandemic on firms' idiosyncratic volatility over time.

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Section: Robustness Checksupporting

confidence: 68%

Section: Covid-19 and Stock Volatility 1563mentioning

confidence: 99%

COVID-19, firm characteristics and stock volatility: new evidence from the Indian tourism sector

Khanna

Sharma²,

Pant³

2022

IJOEM

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“…In addition, Markov-switching Model (MSM) is adopted in further analysis. The models have identified the major events related to the outbreak, such as the Black Swan events and the recovery phase of 2021 and also confirmed the significant impact caused by Covid on sample countries, whereas the impact is differentiated in the sizes of firms [9]. Giglio et al aimed to analyze investors' expectations of economic growth and stock returns during the February-March 2020 stock market crash caused by the COVID-19 pandemic.…”

Section: Related Researchmentioning

confidence: 99%

The Reasons for the Four Circuit Breakers in U.S. Stocks and Their Impact on China

Yan-qin¹,

Yang²,

Zhang³

2023

BCPBM

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Noticing the halt performed by circuit breaker which is a mechanism applied to help investors making more phlegmatic decisions in the US stock market occurred 4 times in just one month, the research is going to find the reasons why there were several times of declines on stock’s prices out of range frequently and find out the impact of occurrence of this phenomenon on Chinese market trading domestically and globally as well as people’s standard of living. The project analyzed the argument of the mechanism of circuit breakers that it worsens the instability in the stock market and the anxiety of consumers. Besides, although there were some be influence on Chinese economic growth and people’s behavior to some extent, China attempted to take government measures efficiently to overcome the negative effects by US stock’s fluctuations and Covid 19. Global organizations felt confident of the economic recovery in China in the long term.

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“…Meanwhile, Xiong et al (2020) focused on firms in one country, China, and found that some firm characteristics have significantly impacted stock returns. Other studies focus on the relationship between firm-level stock performance and the risk or volatility during the COVID-19 pandemic (Davis et al, 2020;Ahmad et al, 2021).…”

Section: Introductionmentioning

confidence: 99%

“…Other studies focus on the relationship between firm-level stock performance and the risk or volatility during the COVID-19 pandemic (Davis et al. , 2020; Ahmad et al. , 2021).…”

Section: Introductionmentioning

confidence: 99%

Profit, cash flow, and leverage: the case of ASEAN stock market performance during the COVID-19 pandemic

Abbas

Nainggolan²

2022

JAEE

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PurposeThe coronavirus disease 2019 (COVID-19) outbreak in the first quarter of 2020 has caused a severe decline in stock markets worldwide. While prior studies in developed markets found that workplace closure can negatively impact the capital market (e.g. Ozili and Arun, 2020), lesser is known about how it impacts emerging capital markets, which may have different characteristics and behaviour (Harjoto et al., 2021). Hence, this study seeks to uncover stock performance around workplace closure dates of firms incorporated in ASEAN countries and investigates the role of accounting fundamentals in mitigating workplace closure policy's effects on stock performances.Design/methodology/approachUsing an event study methodology, the authors measure the cumulative abnormal returns (CARs) around workplace closure dates. The authors then use cross-sectional analysis to analyse whether the accounting fundamentals, specifically profitability, cash flow, and leverage, are associated with the CAR. This cross-sectional study involves 1,720 firms that are incorporated in the ASEAN countries.FindingsThis analysis indicates that, on average, ASEAN capital markets react negatively to workplace closure policies. The authors then find that the CARs around workplace closure dates are positively associated with the current ratios and are negatively associated with long-term debt ratios. This study’s results thus indicate that firms with a higher liquidity and a higher solvency experience a less adverse impact of the COVID-19 pandemic than other firms. The authors also find that the associations are more robust for (1) firms in industries more affected by COVID-19 and (2) firms located in countries with more severe cases. Additionally, contrary to this study’s expectation, the authors do not find meaningful associations between CARs around workplace closure dates and firms' cash flow from operation and profit respectively. This study’s results suggest that investors view prior performances related to firms' ability to generate operating cash flow and profit as less relevant to measure firm performance around the workplace closure event.Research limitations/implicationsThis study’s results contribute to studies examining fundamental accounting roles during the COVID-19 era, specifically in emerging economies. The findings are critical for investors in understanding the company fundamentals associated with stock price performance in emerging markets during the recent health-related crisis.Originality/valueMost studies analysing cross-sectional differences in stock returns during the COVID-19 era focus on industry-level differences and use observations from developed markets (Sinagl, 2020; Ramelli and Wagner, 2020). Studies using firm-level analysis in emerging markets are still limited. The authors expand prior studies by using firm-level analysis that spans six countries in ASEAN.

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COVID-19 Pandemic and firm-level dynamics in the USA, UK, Europe, and Japan

Cited by 21 publications

References 48 publications

COVID-19, firm characteristics and stock volatility: new evidence from the Indian tourism sector

COVID-19, firm characteristics and stock volatility: new evidence from the Indian tourism sector

The Reasons for the Four Circuit Breakers in U.S. Stocks and Their Impact on China

Profit, cash flow, and leverage: the case of ASEAN stock market performance during the COVID-19 pandemic

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