Local Dependence, Exogenous Shock, and Firm Value : Evidence from Korea¡¯s COVID-19 Crisis
Yonghyun Kwon College of Economics & Business, Changwon National University
On 19 February 2020, the Korea Centers for Disease Control and Prevention (KCDC) reported that at least 11 cases of COVID-19 belonged in the same, initial cluster as Shincheonji Daegu church, with confirmed cases then standing at 31. This was the earliest news coverage of the COVID-19 ¡°super-spreader¡± Daegu/ Gyeongsangbuk since the outbreak had begun in South Korea. In this paper, I concentrate on the relationship between the occurrence of a ¡°super-spreader¡± and a negative stock market reaction during the earliest phase of the COVID-19 outbreak. Using location data of public firms¡¯ headquarters, I find that local firms are more negatively affected by the announcement of this exogenous shock than others. However, local firms¡¯ accounting performance and long-term stock market performance are insignificant, or even positive. Overall, this study sheds light on understanding the relationship between changes of local public health risk and stock market reaction.
Yonghyun Kwon
On 19 February 2020, the Korea Centers for Disease Control and Prevention (KCDC) reported that at least 11 cases of COVID-19 belonged in the same, initial cluster as Shincheonji Daegu church, with confirmed cases then standing at 31. This was the earliest news coverage of the COVID-19 ¡°super-spreader¡± Daegu/ Gyeongsangbuk since the outbreak had begun in South Korea. In this paper, I concentrate on the relationship between the occurrence of a ¡°super-spreader¡± and a negative stock market reaction during the earliest phase of the COVID-19 outbreak. Using location data of public firms¡¯ headquarters, I find that local firms are more negatively affected by the announcement of this exogenous shock than others. However, local firms¡¯ accounting performance and long-term stock market performance are insignificant, or even positive. Overall, this study sheds light on understanding the relationship between changes of local public health risk and stock market reaction.
COVID-19,Exogenous Shock,Local Public Health Risk,Proptech,Event Study