CM – 9/11 prepared businesses for the economic impact of COVID-19

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September 9, 2021

from Cardiff University

Companies that experienced the financial repercussions of September 11, 2001 were more resilient to the economic repercussions of COVID-19, according to a study by Cardiff University.

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Researchers found that companies that traded through the 2001 terrorist attacks experienced 7% lower share price losses during the pandemic than companies that did not experience the 9/11 shock.

During Other studies have drawn comparisons between past pandemics and COVID-19, this is the first of its kind to compare the events of the past 18 months with 9/11.

The researchers argue that although categorically different events, both are similar have short-term effects on the stock market.

The lead author Dr. Onur Tosun, Lecturer in Finance at Cardiff Business School, said: « We found that companies that were 11th on during the COVID era.

 » As a result, they outperformed the stock markets by up to 7% better off, saving billions of dollars in market value compared to their peers. Not only that, we found that the stocks of the same companies were trading with more investors, which perhaps signals greater confidence in the companies that have developed some sort of financial resilience over the course of these two monumental events. « 

The Study, conducted in collaboration with Queen Mary University of London, focused on 445 New York City-headquartered companies that trade on three major stock exchanges – the New York Stock Exchange (NYSE), NYSE American, and NASDAQ / p> The team compared the 114 companies that traded across the two events with an additional 331 that were active during the COVID-19 pandemic outbreak period from December 9, 2019 to April 30, 2020.

Professor Arman Eshraghi, Chair of Finance and Investment at Cardiff Business School, said: “We found resilience to be disastrous for individuals n or develop traumatic events, also for companies.

« Your improved organizational resilience developed during one crisis manifests itself in better anticipation, coping and adjustment within the next crisis.

 » What we are for keep interesting, it may be possible to predict how the ‘survivors’ of the COVID crisis will behave in future crises. Perhaps a similar pattern will apply. ”

The researchers say their findings will be important to corporate sector practice and policy as the possibility of similar epidemics and pandemics is likely in the future.

Gülnur Muradoğlu , Professor of Finance at Queen Mary’s School of Business and Management, added: « Our results are having an impact on investors and businesses alike.

 » Investors should take notice and take note of those companies that are ‘surviving’ COVID-19 have – they will be the resilience when faced with similar problems in the future.

“Businesses, like all businesses, are going through an unprecedented crisis, but our results show that they will undoubtedly learn from the pandemic too. They will build on and improve their organizational processes and practices to make them fit for future crises. ”

The article » Staring Death in the Face: The Financial Impact of Corporate Exposure to Prior Disasters « was published in the British Journal of Management published.

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