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Covid-19 and firms’ stock price growth: The role of market capitalization

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Brueckner, M, Kang, W and Vespignani, JL ORCID: 0000-0003-0265-4377 2021 , Covid-19 and firms’ stock price growth: The role of market capitalization.

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Abstract

This paper studies the role of capitalization on firms’ 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 firms’
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 firms’ stock prices by about 0.7 percentage points. Effects
of capitalization on the impact that Covid-19 infections have on firms’ 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.

Item Type: Report (Discussion Paper)
Authors/Creators:Brueckner, M and Kang, W and Vespignani, JL
Keywords: Covid-19, performance of firms, stock market capitalization, U.S. stock market
Publisher: University of Tasmania
Copyright Information:

Copyright 2021 University of Tasmania

Additional Information:

Discussion Paper Series N 2021-09
JEL Classification: G10, E30

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