How does China's stock market react to supply chain disruptions from COVID-19?

https://doi.org/10.1016/j.irfa.2022.102168Get rights and content

Highlights

  • China's stock market reaction to supply chain disruptions from COVID-19 is examined.

  • COVID-19 has an immediate impact on Chinese firms.

  • Hubei firms experience stronger effects than non-Hubei firms.

  • Supply chain disruptions effects from COVID-19 are observed.

Abstract

As a once-in-a-century global pandemic, COVID-19 severely hit the global economy and disrupted the worldwide supply chain. Based on 505 Chinese firms, we use the event study method to explore the effect of COVID-19 on the financial performance of firms. The findings show that COVID-19 has an immediate impact on Chinese firms. Hubei firms experience stronger effects than non-Hubei firms. Supply chain disruptions effects from COVID-19 are observed. Transportation industry is hit more severely than retail industry. Insurance companies experience a strong adverse effect. On the other hand, both medical and competitor firms experience significantly positive spillover effects.

Keywords

COVID-19
Abnormal returns
Event study
Supply chain disruption

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