China's stock market reaction to supply chain disruptions from COVID-19 is examined.
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COVID-19 has an immediate impact on Chinese firms.
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Hubei firms experience stronger effects than non-Hubei firms.
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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.