How do Companies React to Epidemic Diseases?

The ongoing worldwide Corona pandemic affects all major economies and is pervasive across all industries. In their latest research paper published in the National Bureau of Economic Research (NBER) series, Firm-Level Exposure to Epidemic Diseases: Covid-19, SARS and H1N1, Laurence van Lent, Professor of Accounting and Economics at Frankfurt School of Finance & Management, Tarek A. Hassan from Boston University, Stephan Hollander from Tilburg University and Ahmed Tahoun from London Business School develop quarterly, firm-level measures of the costs, benefits and risks that almost 12,000 companies in over 80 countries associate with the spread of Covid-19. The researchers identify which firms expect to gain or lose from the corona-virus crises and earlier epidemics and which are most effected by the associated uncertainty as a disease spreads. In Germany, over 60 percent of the sample firms discussed Covid-19 in their calls with financial analysts during the first quarter.

“As Covid-19 initially hit the world in January 2020, we find that firm’s primary concerns relate to the collapse of demand, increased uncertainty, and disruption in supply chains”, said Laurence van Lent. “We also identified some firms, especially in pharmaceuticals, health care, gaming, and online education that foresee opportunities in new or disrupted markets due to the spread of the disease.”

By March, however, firms increasingly discussed liquidity and other financing concerns as well as measures taken to protect the well-being of their employees. Furthermore, the researchers showed, that companies that have experience with SARS or H1N1 have more positive expectations about their ability to deal with the coronavirus outbreak.

Download the whole publication here.