Loizides, George and Charitou, Melita and Lois, Petros (2023) The market reaction to COVID-19: European Evidence. European Journal of Accounting, Auditing and Finance Research, 11 (3). pp. 27-53. ISSN 2053-4086(Print), 2053-4094(Online)
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Abstract
The aim of this study is to examine the market reaction to COVID- 19 on European capital markets and its long-run performance. Using a dataset of 3,181 firms over the period 2019-2021 results show that the COVID-19 effect differs by region, country and sector. The average cumulative abnormal returns (CARs) for the European countries under investigation are -12.32%, with Austria (-19.24%), Germany (-16.31%) and Ireland (-16.63%) being the most affected countries from the pandemic over the 11-day window around the event. Sectors were affected differently, with Energy (-15.74%), as expected, being the most negatively affected in the short run. Regarding the long-term effects of the pandemic, evidence based on the 18-month buy and hold raw returns (BHR) shows increase of 41.6%, with the Utilities sector being the best performer in the Southeastern EU with BHR returns of 124.6%. Interestingly, our evidence suggests that larger, more profitable, more efficient firms with greater operating cash flow ability were those that yield the greatest long run market return performance after the pandemic.
| Item Type: | Article |
|---|---|
| Subjects: | H Social Sciences > H Social Sciences (General) |
| Depositing User: | Professor Mark T. Owen |
| Date Deposited: | 26 Mar 2023 10:00 |
| Last Modified: | 26 Mar 2023 10:00 |
| URI: | https://tudr.org/id/eprint/1613 |
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