Layoffs and stock market performance during the COVID-19 pandemic: evidence from the US

PurposeThe authors examine the short-term stock market reaction surrounding US layoffs during the coronavirus disease 2019 (COVID-19) period. The authors' specific interest is on any changes that may be observed in US stock markets during the COVID-19 outbreak. This information will help us assess the extent to which policymakers adopted at time revenue and expenditures measures to minimize its negative impact.Design/methodology/approachThe authors study the linkage between layoffs announced by firms and stock markets in US for the COVID-19 period between March 2020 and October 2020. This period shows important economic figures;a huge number of job cuts announced by blue-chip companies listed in the New York Stock Exchange (NYSE) due to widespread economic shutdowns. The authors examine whether and to what extent stock markets in US have reacted to layoff announcements during the COVID-19 pandemic using an event-study methodology.FindingsThe study's results show that US layoffs during the pandemic did not cause any abnormalities on the stock returns, either positive or negative. Based on the mean-adjusted volume, the authors find that layoffs increase the stocks' trading volume, especially on the event date and the day following the event. US stocks become more volatile on the days following the event. Interestingly, on the event date, the authors find that stocks get the highest abnormal volatility;however, the result is statistically insignificant.Practical implicationsThe authors suggest that layoffs announcements follow the business cycle quite closely in most industries. The study's results have implications for investors, regulators and policymakers as they permit to examine the effectiveness of the measures adopted.Social implicationsThe study's results show that policymakers reduced uncertainty implementing intensive measures quickly and should follow similar policy in the future pandemic and/or unexpected events.Originality/valueThis paper contributes to the literature in two directions: First, to the best of the authors' knowledge this is the first study that provides empirical evidence and assesses the extent to which a major global shock such as the COVID-19 pandemic may have altered the reaction of US stock markets to layoff announcements. Second, this is the first study on this topic that examines volume and volatility abnormalities, while the authors check the robustness of the findings with different methods to calculate abnormal returns.

COVID-19 outbreak and performance of financial markets: evidence from the stock market, the foreign exchange market and cryptocurrencies market in Nigeria

The study investigated performance of the stock market, foreign exchange market and the cryptocurrencies market as a result of COVID-19 outbreak. Event studies methodology was employed to determine the abnormal return (AR) and corresponding cumulative abnormal return (CAR) following the first confirmed case of the pandemic and the first recorded case of fatality, after controlling for the concurrent effect of crude price fluctuations. Consistent with previous studies, the paper documented evidence of negative reaction of –0.34% and –1.01% for the Nigerian stock market and the cryptocurrency market respectively at the announcement of first case of the pandemic's outbreak. The study also documented negative and statistically significant effects of –1.71% and –0.78% for Nigerian stock market and the cryptocurrency market respectively when the first case of death was announced. Adverse effect of the pandemic was found to be stronger when the first case of death was announced compared to first reported case of the outbreak. However, negative but insignificant effect was recorded for the foreign exchange market. The paper concluded that negative reaction for the stock market is consistent with market panic and policy uncertainty during the pandemic. Furthermore, adverse effect of the pandemic on the cryptocurrency market was due to increased co-movement of the market with regulated financial markets such as the stock market as well as correlation of returns between the markets. Copyright © 2023 Inderscience Enterprises Ltd.

Stock Price Reaction and Market Efficiency on Budget Announcement During Covid Periods: An Empirical Analysis of Indian Stock Market

This study empirically analysed the stock price reaction and the efficiency of Indian stock market of the Nifty 50 index around the budget announcements during covid periods from 2020 to 2022 by applying event study methodology. The market efficiency was tested by employing 61 days event study window including 30 days before and 30 days after the announcement date, and the event date of the budget, while the estimation window period comprises of 120 days of the pre-event period. The market model is employed to demonstrate abnormal returns near the event date and to assist in estimating expected returns. Abnormal returns, Average abnormal returns, Cumulative average abnormal returns, and ttests were applied for analysing the market efficiency on Indian budget announcements. This research paper reveals that the efficiency level of the Indian stock market is high and the investors can not make an abnormal profit over the budget announcements during Covid periods. © 2022, Remittances Review. All Rights Reserved.

COVID-19 Outbreak and Sectoral-Level Stock Returns in the Tehran Stock Exchange: An Event Study

This article attempts to empirically investigate the impacts of the COVID-19 pandemic on average returns and investment risk of the 33 leading industries, categorized in nine groups of industries indexes, in Tehran Stock Exchange. Using an event-study methodology, our data sample (from 2018/12/15 to 2021/04/24) was partitioned into three sub-samples, namely estimated, event, and future windows. To address the main objectives of this study, variations in actual, abnormal, and cumulative abnormal returns of the estimated (pre-event) and future (post-event) windows were analyzed for all industries. The results confirmed that the "Retail except for Vehicles" and "Real State and Housing" industries have had the highest decrease in their average returns and, conversely, the "Telecommunication and Technology," "Financial," and "Pharmaceutical and Health" industries have experienced the most considerable increase in the average returns. Furthermore, the analysis of the time required for the effectiveness of the pandemic impacts on the stock returns showed that a 14-day lag (after the exposure) is needed for various industries to respond to the event. Ultimately, our empirical evidence confirmed that the uncertainty caused by the COVID-19 outbreak has negatively affected almost all industries active in the TSE. © 2022 by the Author(s).

The Impact of COVID-19 on Hotel Stock Prices in Europe: An Event Study Approach

The outbreak of the novel corona virus has severely impacted the world economy. Along with the challenges imposed on the healthcare sector, the pandemic also affected the performance of all sorts of industries. With many businesses already shut and many more struggling to survive, the overall impact of the pandemic on different sectors of the economy remains a subject of further research. In this paper, the impact of corona virus outbreak on the performance of hotel stock prices in Europe is analysed through an Event Study Methodology. Four major events in the corona virus timeline of Europe between January and May 2020 were considered for the study. For the 15 publicly listed hotels, significantly high negative average abnormal return and the cumulative abnormal return was observed during event 2 and event 3 that occurred on March 11 and March 17 respectively. These two events marked the peak of the outbreak in Europe when the travel and movement restrictions were strictly imposed. The average and cumulative abnormal returns showed signs of positive change during event 4 (May 11) which can be attributed to easing of lockdown in many European countries. Thus, for businesses including hotels to start recovering from their current losses it is required that the restrictions are gradually uplifted, and people start moving towards normalcy in their lifestyle as well as the governments to provide support in the form of stimulus packages. © 2022 Publishing India Group. All rights reserved.

The effect of environmental, social and governance risks

This study examines the effect of environmental, social and governance risks on firm value. We analyze the extent to which environmental, social and governance related news affect tourism firms' abnormal returns using event study methodology. The results show that environmental, social and governance related news releases do not significantly affect firm value in the short-term. We further investigate the effect of environmental, social and governance risks on the value of tourism firms during the recent pandemic utilizing difference-in-differences analysis. The results provide robust evidence that sustainable business practices provide higher resilience to pandemic-like external shocks. Also, the presence of a sustainability committee mitigates the adverse effects of environmental, social and governance risks on firm value. Theoretical and practical implications are discussed.

Mathematical Modeling of the Financial Impact of Air Crashes on Airlines and Involved Manufacturers

Despite air transport being the safest way to travel, accidents still happen, which incur massive costs and many consequences for industry and society. The main objective of this research is to determine the financial impact of air crashes by distinguishing between fatal and non-fatal events and their effect on the market stock price of the involved companies of airlines and manufacturers. This study also aims to contribute to the literature about the Event Study Methodology by determining which model of the two most employed in this methodology (Market model or Fama-French model) provides more accurate results. The results reveal that the companies harmed when an air crash occurs include the involved airline, regardless of the causes of the crash if it was a fatal event. However, with non-fatal events, the impact on airlines differs depending on the event’s outcome. In any case, effects are immediate, especially on the same day the event occurred. Nevertheless, manufacturing firms show no negative abnormal returns after an air crash. Finally, the Market model is more accurate in this study. These results are important for investors since they show mistrust in air transport and losses only occur in the airline involved, especially if the accident is fatal. In turn, our results provide reassurance to investors in manufacturing companies in the event of such an occurrence. In any case, this study has shown that both airlines and manufacturers must continue to promote and improve safety.

The financial impacts of information systems security breaches on publicly traded companies: reactions of different sectors

Purpose>Today, information systems and technology provides a wide set of tools for companies to increase the efficiency of their businesses. Although technology offers many benefits to businesses, it also brings risks as the information systems security breaches. Security breaches and their financial impact is a constant concern of the researchers and practitioners. This paper explores information systems breaches and their financial impacts on the publicly traded companies in different sectors.Design/methodology/approach>After a comprehensive data collection process, data from 192 events are analyzed by employing Event Study Methodology and a comparison of the results between the four highly affected sectors (Consumer Goods, Technology, Financial and Communications) is presented. The abnormal returns on the prices of stocks after the events are calculated with the Market Model. Also, the results of the Market Adjusted Model and Mean Adjusted Model are presented to support the results.Findings>While information systems security breaches have a significant negative impact on the Financials and the Technology sectors for all the event windows in the study ([−5, 0], [−5, 1], [−5, 5], and [−5, 10]), the significant negative impact is observed only on the [−5, 5] and [−5, 10] event windows for the Consumer Goods sector. No significant negative impact is observed in the Communications sector, in fact, the cumulative abnormal returns are positive for this sector.Originality/value>The contribution of this paper to provide evidence about the financial impacts of the information systems breaches for businesses in different sectors. While there are studies that have previously focused on the information systems breaches and their financial impacts on businesses, to the best of our knowledge, this is the first study that compares this effect between the four highly impacted sectors. With a relatively larger sample size and broader event windows than the past studies in the literature, statistical evidence is provided to managers to justify their investments in information security and build preventive measures to secure the market value of their firms.

Action for Action: Mad COVID-19, Falling Markets and Rising Volatility of SAARC Region

The Southern Region has reported a large number of contagious pandemic outbreaks. These epidemics brought threats to human health and resulted in serious economic losses. The COVID-19 is a global virus and has weakened the global financial markets with significant effect on stock returns and market volatilities. The study obtained a dataset about the financial market structure of South Asian Association for Regional Cooperation (SAARC) Countries. The purpose of the study is to determine the effect of 2019-nCov on stock market performance of SAARC member states. The study considered indexes of the National Stock Exchanges of each country and applied an event study approach for estimating the impact of Mad COVID-19 on the stock returns and market volatilities with an event window of 25 days of severe pandemic hits. The CAR approach proved the declining effect of Mad COVID-19 on the stock returns of SAARC countries. Asymmetric GJR-GARCH Model estimated the changeable volatility and proved the increase in volatility with COVID-19 as a negative shock. SAARC Region significantly reacts to Mad COVID-19 with falling markets and rising volatility.

Impact of COVID-19 Pandemic on Stock Market: Evidence from Bombay Stock Exchange

The present study attempts to examine the behavior of the Indian stock market during the COVID 19 pandemic. In the study, a systemic approach is undertaken, where three significant events, namely declaration of COVID 19 as a pandemic, first death in India by COVID 19 and imposition of the nationwide lockdown, have been considered and the market reaction around the events is studied. The study employed event study methodology with daily return series of hundred and one firms, constituting the BSE 100 index. The study observed that the investors did not provide much attention to the announcement of the COVID 19 as a pandemic. However, the investors started panicking after the first death by the pandemic was reported, as witnessed from the negative abnormal returns the return further declined on the announcement of nationwide lockdown. However, the sectors like FMCG, Health and Technology earned an abnormal positive return on the announcement of the nationwide lockdown. The study further employed GARCH Model and observed high volatility in the return series during the events. Overall, the study concludes that the events have a significant negative impact on the Indian stock market.

Layoffs and stock market performance during the COVID-19 pandemic: evidence from the US

Purpose: The authors examine the short-term stock market reaction surrounding US layoffs during the coronavirus disease 2019 (COVID-19) period. The authors’ specific interest is on any changes that may be observed in US stock markets during the COVID-19 outbreak. This information will help us assess the extent to which policymakers adopted at time revenue and expenditures measures to minimize its negative impact. Design/methodology/approach: The authors study the linkage between layoffs announced by firms and stock markets in US for the COVID-19 period between March 2020 and October 2020. This period shows important economic figures;a huge number of job cuts announced by blue-chip companies listed in the New York Stock Exchange (NYSE) due to widespread economic shutdowns. The authors examine whether and to what extent stock markets in US have reacted to layoff announcements during the COVID-19 pandemic using an event-study methodology. Findings: The study’s results show that US layoffs during the pandemic did not cause any abnormalities on the stock returns, either positive or negative. Based on the mean-adjusted volume, the authors find that layoffs increase the stocks' trading volume, especially on the event date and the day following the event. US stocks become more volatile on the days following the event. Interestingly, on the event date, the authors find that stocks get the highest abnormal volatility;however, the result is statistically insignificant. Practical implications: The authors suggest that layoffs announcements follow the business cycle quite closely in most industries. The study’s results have implications for investors, regulators and policymakers as they permit to examine the effectiveness of the measures adopted. Social implications: The study’s results show that policymakers reduced uncertainty implementing intensive measures quickly and should follow similar policy in the future pandemic and/or unexpected events. Originality/value: This paper contributes to the literature in two directions: First, to the best of the authors’ knowledge this is the first study that provides empirical evidence and assesses the extent to which a major global shock such as the COVID-19 pandemic may have altered the reaction of US stock markets to layoff announcements. Second, this is the first study on this topic that examines volume and volatility abnormalities, while the authors check the robustness of the findings with different methods to calculate abnormal returns. © 2021, Emerald Publishing Limited.

Impacts of COVID-19 and anti-pandemic policies on urban transport-an empirical study in China.

The COVID-19 pandemic that began in the last quarter of 2019 seriously impacted the transportation industry. Countries around the world adopted various restrictions and policies to prevent the spread of the pandemic, which resulted in a sharp drop in the demand for transportation. China was the first country to detect the pandemic and the fastest to recover. Existing policies and impacts were reviewed to analyze the impact of the pandemic on China's urban transportation sector and propose measures that may be taken to reduce the impact of COVID-19. This study reviews the impact on urban transportation system operations and how government should respond to a viral pandemic. The recovery measures during and after the pandemic and their hierarchical response system are analyzed. Furthermore, to empirically explore the effect of the recovery measures, this study adopted the Event Study Methodology (ESM) to quantitatively analyze the impact of the epidemic as well as anti-pandemic policies on the traffic flow sequence in the resurgence of COVID-19 in Beijing. The research findings provided solid policy implications and experiences for constructing sustainable urban transportation system and improve flexibility, reliability, and resilience of traffic governance in post-pandemic era.