Working Paper: NBER ID: w26971
Authors: Tarek Alexander Hassan; Stephan Hollander; Laurence Van Lent; Markus Schwedeler; Ahmed Tahoun
Abstract: We construct text-based measures of the primary concerns listed firms associated with the spread of COVID-19 and other epidemic diseases. We identify which firms perceive to lose or gain from a given epidemic and textually decompose the epidemic's effect on the firm's demand and supply. We find that the effects of COVID-19 manifest as a simultaneous shock to demand and supply, with both shocks affecting firms' market valuations in equal measure on average. By contrast, demand-related impacts appear more important in accounting for the observed collapse in firm-level investment during the COVID-19 crisis.
Keywords: COVID-19; Epidemic Diseases; Firm-Level Exposure; Supply Shock; Demand Shock
JEL Codes: E0; E6; F0; G12; I0
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| COVID-19 (I15) | firm performance (L25) |
| COVID-19 discussions (Z00) | stock price declines (G12) |
| supply shocks (E39) | firm valuation (G32) |
| demand shocks (E39) | firm-level investment (G31) |