ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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The Impact of COVID-19 on the Stock Market and Corporate Firms

This paper highlights the possible consequences of the pandemic on the stock markets. It notes that higher profitability in the past years, better growth opportunities in the stock market, and being a stand-alone firm have a favourable impact on stock price reactions to COVID-19 shocks and, hence, they make such firms more resilient.

 

Following the outbreak of COVID-19, a severe economic crisis hit the world, which appeared to be the worst since the Great Depression (Gopinath 2020). But the behaviour of the stock markets appears to be insensitive to this major crisis. From the worldwide trends of stock prices, no relationship is apparent between the severity of the pandemic as indicated by the number of COVID-19 cases and deaths and the reactions of stock markets. Thus, how far the reactions of the stock markets can be explained by economic fundamentals remains a matter of curiosity.

Krugman (2020), in one of his New York Times columns, tells us to remember three rules in this regard:

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Published On : 17th Jan, 2024

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