A new study involving a Queen Mary University of London researcher has shown companies that experienced the financial impact of 9/11 were more resilient to the economic effects of COVID-19.
The research, co-authored by researchers from Cardiff University, found stock price losses during the pandemic were 7 per cent lower for companies who had traded through the terrorist attacks in 2001, when compared to those that were not exposed to the 9/11 shock.
While other studies have drawn comparisons between past pandemics and COVID-19, this is the first of its kind to compare the events of the last eighteen months with 9/11.
The researchers argue that, while categorically different events, both share similar short-term impacts on the stock market.
The study focused on 445 companies headquartered in New York City and trading on three major stock markets – the New York Stock Exchange (NYSE), NYSE American and NASDAQ.
Researchers compared the 114 firms that traded across the two events with a further 331 who were active during the outbreak period of the COVID-19 pandemic from 9 December 2019 to 30 April 2020.
Gulnur Muradoglu, Professor of Finance at Queen Mary’s School of Business and Management, said: “Our findings have implications for investors and corporations alike.
“Investors should sit up and take note of those firms that have ‘survived’ COVID-19 – they will be the resilient ones when faced with similar problems in the future.
“Businesses, like everyone, are going through an unprecedented crisis but our findings show they will no doubt be learning from the pandemic, also. They will be building on and improving their organisational processes and practices making them stronger for future crises.”
Research paper: Staring Death in the Face: The Financial Impact of Corporate Exposure to Prior Disasters, British Journal of Management.
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