How to Cite
Maria Luisa, & Valdés Medina, F. E. (2024). Financial Effects of the Covid 19 Pandemic on Stock Prices of Dow Jones Index. Revista Finanzas Y Política Económica, 16(2). https://doi.org/10.14718/revfinanzpolitecon.v16.n2.2024.9
License
Creative Commons License

This work is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License.

This journal is licensed by a Creative Commons Attribution License (CC BY-NC-SA 4.0) Attribution-Non Commercial 4.0 International. For the CC licenses, the principle isthe creative freedom. This system complements the copyright without opposing it, conscious of its importance in our culture. The content of the articles is the responsibility of each author, and does not compromise in any way, to the journal or the university. It allows the transmission and reproduction of titles, abstracts and full content, with academic, scientific, cultural ends, provided acknowledgment of the respective source. This work cannot be used for commercial purposes. 

Licencia de Creative Commons

They journal does not charge authors for submission or publication.

Abstract

The objective was to analyze the financial effects produced by the COVD-19 Pandemic in the companies that make up the Dow Jones Industrial Average (DJIA) index. The Event Study technique was applied to 30 entities that make up the DJIA, considering the financial impact of the dates of the World Health Organization (WHO) communications on stock returns. The results of the analysis prove the existence of favorable evidence in relation to the market efficiency of the DJIA, in addition, it was possible to demonstrate that the stock market benefits of the organizations that make up the technology sector have a positive performance in light of the reports on health crises disseminated by the OMS.

Keywords:

References

Abadie, A. (2005). Semiparametric Difference-in-Differences Estimators. The Review of Economic Studies, 72(1), 1-19.

Abadie, A., Diamond, A., & Hainmueller, J. (2010). Synthetic Control Methods for Comparative Case Studies: Estimating the Effect of California's Tobacco Control Program. Journal of the American Statistical Association, 105(490), 493-505.

Abadie, A., Diamond, A., & Hainmueller, J. (2015). Comparative Politics and the Synthetic Control Method. American Journal of Political Science, 59(2), 495-510.

Abadie, A., & Gardeazabal, J. (2003). The Economic Costs of Conflict: A Case Study of the Basque Country. American Economic Review, 93(1), 113-132.

Abraham, F., Leliaert, H., & Heremans, D. (1991). Foreign Dependence of Individual Stock Prices: The Role of Aggregate Product Market Developments. Open Economies Review, 2(1), 1-26. https://doi.org/10.1007/BF01886132

Ahmed, R. R., Streimikiene, D., Rolle, J. A., & Pham, A. D. (2020). The COVID-19 pandemic and the antecedants for the impulse buying behavior of US citizens. Journal of Competitiveness, 12(3), 5–27. https://doi.org/10.7441/joc.2020.03.01

Alajbeg, D., Bubaš, Z., & Šonje, V. (2012). The efficient market hypothesis: problems with interpretations of empirical tests. Financial Theory and Practice, 36(1), 53-72. https://doi.org/10.3326/fintp.36.1.3

Ali, I., & Alharbi, O. (2020). COVID-19: Disease, management, treatment, and social impact. Science of the Total Environment, 728, 138861. https://doi.org/10.1016/j.scitotenv.2020.138861

Andoh-Baidoo, F. K., Osei-Bryson, K. M., & Amoako-Gyampah, K. (2012). A hybrid decision tree based methodology for event studies and its application to e-commerce initiative announcements. ACM SIGMIS Database: The DATABASE for Advances in Information Systems, 44(1), 78-101. https://doi.org/10.1145/2436239.2436244

Angrist, J. D., & Pischke, J.-S. (2009). Mostly Harmless Econometrics: An Empiricist's Companion. Princeton University Press.

Audretsch, D. B., Bozeman, B., Combs, K. L., et al. (2002). The Economics of Science and Technology. The Journal of Technology Transfer, 27(2), 155–203. https://doi.org/10.1023/A:1014382532639

Baltagi, B. H. (2008). Econometric Analysis of Panel Data (4th ed.). John Wiley & Sons.

Basse Mama, H., Mueller, S., & Pape, U. (2017). What’s in the news? The ambiguity of the information content of index reconstitutions in Germany. Review of Quantitative Finance and Accounting, 49(4), 1087–1119. https://doi.org/10.1007/s11156-017-0617-1

Benninga, S. (2014). Financial Modeling. MIT Press.

Cavalcante, R. C., Brasileiro, R. C., Souza, V. L., Nobrega, J. P., & Oliveira, A. L. (2016). Computational intelligence and financial markets: A survey and future directions. Expert Systems with Applications, 55, 194-211. https://doi.org/10.1016/j.eswa.2016.02.006

Cave, J., Chaudhuri, K., & Kumbhakar, S. C. (2020). Do banking sector and stock market development matter for economic growth? Empirical Economics, 59, 1513–1535. https://doi.org/10.1007/s00181-019-01692-7

Chung, R., Fung, S., Shilling, J. D., & Simmons, T. (2011). What Determines Stock Price Synchronicity in REITs? Journal of Real Estate Finance and Economics, 43(1), 73–98. https://doi.org/10.1007/s11146-010-9254-3

Clayman, M. R., Fridson, M. S., & Troughton, G. H. (2012). Corporate Finance: A Practical Approach (Vol. 42). John Wiley & Sons.

Davis, M., Braunholtz-Speight, T., & Wardrop, R. (2020). Crowdfunding as Democratic Finance? Understanding How and Why UK Investors Trust these Markets. Revista Internacional de Sociología, 78(4), e173. https://doi.org/10.3989/ris.2020.78.4.m20.005

Eckbo, B. E., Masulis, R. W., & Norli, Ø. (2007). Security offerings. Handbook of Empirical Corporate Finance, 233-373. https://doi.org/10.1016/B978-0-444-53265-7.50020-2

Eder, L., Filimonova, V., Provornaya, V., & Nemov, V. (2017). The current state of the petroleum industry and the problems of the development of the Russian economy. IOP Conference Series: Earth and Environmental Science, 84(1), 012012. https://doi.org/10.1088/1755-1315/84/1/012012

Fama, E. F., & Malkiel, B. G. (1970). Efficient Capital Markets: A Review of Theory and Empirical Work. The Journal of Finance, 25(2), 383-417. www.jstor.org/stable/2325486

Fama, E. F., Fisher, L., Jensen, M. C., & Roll, R. (1969). The Adjustment of Stock Prices to New Information. International Economic Review, 10(1), 1-21. https://doi.org/10.2307/2525569

Guiso, L., & Jappelli, T. (2005). Awareness and stock market participation. CFS Working Paper, No. 2005/29, Goethe University Frankfurt, Center for Financial Studies (CFS). https://EconPapers.repec.org/RePEc:zbw:cfswop:200529

Hallegatte, S., Henriet, F., & Corfee-Morlot, J. (2011). The economics of climate change impacts and policy benefits at city scale: a conceptual framework. Climatic Change, 104(1), 51–87. https://doi.org/10.1007/s10584-010-9976-5

Hahn, J., Todd, P., & Van der Klaauw, W. (2001). Identification and Estimation of Treatment Effects with a Regression Discontinuity Design. Econometrica, 69(1), 201-209.

Hardin, W. G., Liano, K., & Huang, G. C. (2005). REIT Stock Splits and Market Efficiency. Journal of Real Estate Finance and Economics, 30(2), 297–315. https://doi.org/10.1007/s11146-005-6409-8

Hays, J. N. (2005). Epidemics and Pandemics: Their Impacts on Human History (Vol. I). ABC-CLIO. DOI: https://iucat.iu.edu/iuk/6403443

He, P., Sun, Y., Zhang, Y., & Li, T. (2020). COVID–19’s impact on stock prices across different sectors—An event study based on the Chinese stock market. Emerging Markets Finance and Trade, 56(10), 2198-2212. https://doi.org/10.1080/1540496X.2020.1785865

Hoesli, M., Milcheva, S., & Moss, A. (2020). Is Financial Regulation Good or Bad for Real Estate Companies? – An Event Study. Journal of Real Estate Finance and Economics, 61, 369–407. https://doi.org/10.1007/s11146-017-9634-z

Hsiao, C. (2003). Analysis of Panel Data (2nd ed.). Cambridge University Press.

Hsieh, Y., Wu, T., Liu, D., Shao, P., Chang, L., Lu, C., Lee, C., Huang, F., & Huang, L. (2006). Influenza Pandemics: Past, Present and Future. Journal of the Formosan Medical Association, 105(1), 1-6. https://doi.org/10.1016/S0929-6646(09)60102-9

Hsu, S., & Melchor, A. C. (2016). China’s structural transformation: reaching potential GDP in the financial services sector. China Finance and Economic Review, 4(3). https://doi.org/10.1186/s40589-016-0027-x

Huynh, T. L. D., Foglia, M., Nasir, M. A., & Angelini, E. (2021). Feverish sentiment and global equity markets during the COVID-19 pandemic. Journal of Economic Behavior & Organization, 188, 1088-1108. https://doi.org/10.1016/j.jebo.2021.06.016

Ichev, R., & Marine, M. (2018). Stock prices and geographic proximity of information: Evidence from the Ebola outbreak. International Review of Financial Analysis, 56, 153-166. https://doi.org/10.1016/j.irfa.2017.12.004

Iqbal, S., Bilal, A. R., Nurunnabi, M., et al. (2021). It is time to control the worst: testing COVID-19 outbreak, energy consumption and CO2 emission. Environmental Science and Pollution Research, 28, 19008–19020. https://doi.org/10.1007/s11356-020-11462-z

Jaramillo, J., & García, M. (2012). Reacción del Mercado de Valores Mexicano ante los Escándalos Financieros, Evidencia Empírica. Revista Mexicana de Economía y Finanzas, 7(2), 129-153. https://doi.org/10.21919/remef.v7i2.32

Kang, H. J., Lee, S. G., & Park, S. Y. (2022). Information efficiency in the cryptocurrency market: The efficient-market hypothesis. Journal of Computer Information Systems, 62(3), 622-631. https://doi.org/10.1080/08874417.2021.1872046

Keogh-Brown, M. R., Smith, R. D., Edmunds, J. W., & Beutels, P. (2010). The macroeconomic impact of pandemic influenza: estimates from models of the United Kingdom, France, Belgium and The Netherlands. The European Journal of Health Economics, 11, 543-554. https://doi.org/10.1007/s10198-009-0210-1

Kimmich, D., Hildt, E., & Mac Donagh, P. (2019). Value recovery with harvester applying bucking optimization technology. Scientia Forestalis, 47(122), 1-8. https://dx.doi.org/10.18671/scifor.v47n122.03

Kolari, J., & Pynnonen, S. (2011). Nonparametric rank tests for event studies. Journal of Empirical Finance, 18(5), 953-971. https://doi.org/10.1016/j.jempfin.2011.08.003

Konchitchki, Y., & O'Leary, D. E. (2011). Event study methodologies in information systems research. International Journal of Accounting Information Systems, 12(2), 99-115. https://doi.org/10.1016/j.accinf.2011.01.002

Kumar, A., Zarychanski, R., Pinto, R., Cook, D. J., Marshall, J., Lacroix, J., & Canadian Critical Care Trials Group H1N1 Collaborative (2009). Critically ill patients with 2009 influenza A (H1N1) infection in Canada. Jama, 302(17), 1872-1879. https://doi.org/10.1001/jama.2009.1496

Lazaro, M. I. (2023). Dow Jones Industrial Average. Dow Jones Industrial Average. Diccionario Económico.

Lee, D. S., & Lemieux, T. (2010). Regression Discontinuity Designs in Economics. Journal of Economic Literature, 48(2), 281-355.

Liu, H., Manzoor, A., Wang, C., Zhang, L., & Manzoor, Z. (2020). The COVID-19 Outbreak and Affected Countries Stock Markets Response. International Journal of Environmental Research and Public Health, 17(8), 1-19. https://doi.org/10.3390/ijerph17082800

Lubys, J., & Panda, P. (2020). US and EU unconventional monetary policy spillover on BRICS financial markets: an event study. Empirica, 48, 353–371. https://doi.org/10.1007/s10663-020-09480-8

MacKinlay, A. C. (1997). Event Studies in Economics and Finance. Journal of Economic Literature, 35(1), 13-39.

Maul, D., & Schiereck, D. (2017). The bond event study methodology since 1974. Review of Quantitative Finance and Accounting, 48, 749-787. https://doi.org/10.1007/s11156-016-0562-4

McMillen, C. (2016). Pandemics: A Very Short Introduction. Oxford University Press.

Md Rajib, K., Ferdous, M., & Mozaffar, M. (2022). Stock market reactions of Maritime shipping industry in the time of COVID-19 pandemic crisis: An empirical investigation. Maritime Policy & Management, 49(8), 1184-1199. https://doi.org/10.1080/03088839.2021.1954255

Mishra, P., & Mishra, S. (2020). Corona Pandemic and Stock Market Behaviour: Empirical Insights from Selected Asian Countries. Millennial Asia, 11(3), 341-365. https://doi.org/10.1177/0976399620952354

Mnif, E., Salhi, B., & Jarboui, A. (2020). Herding behaviour and Islamic market efficiency assessment: case of Dow Jones and Sukuk market. International Journal of Islamic and Middle Eastern Finance and Management, 13(1), 24-41. https://doi.org/10.1108/IMEFM-10-2018-0354

Oler, D. K., Harrison, J. S., & Allen, M. R. (2008). The danger of misinterpreting short-window event study findings in strategic management research: An empirical illustration using horizontal acquisitions. Strategic Organization, 6(2), 151-184. https://doi.org/10.1177/1476127008090008

Patell, J. (1976). Corporate forecasts of earnings per share and stock price behavior: Empirical test. Journal of Accounting Research, 14(2), 246-276. https://doi.org/10.2307/2490543

Peón, D., Antelo, M., & Calvo, A. (2019). A guide on empirical tests of the EMH. Review of Accounting and Finance, 18(2), 268-295. https://doi.org/10.1108/RAF-02-2016-0031

Phylaktis, K., & Ravazzolo, F. (2005). Stock prices and exchange rate dynamics. Journal of International Money and Finance, 24(7), 1031-1053. https://doi.org/10.1016/j.jimonfin.2005.08.001

Pinho, C., & Madaleno, M. (2016). Oil prices and stock returns: nonlinear links across sectors. Portuguese Economic Journal, 15(2), 79–97. https://doi.org/10.1007/s10258-016-0117-6

Pooja, M., & Jaya, G. (2021). Impact of COVID-19 on Indian Migrant Workers: Decoding Twitter Data by Text Mining. The Indian Journal of Labour Economics, 64, 731-747. https://doi.org/10.1007/s41027-021-00324-y

Ritter, J. R. (1991). The Long Run Performance of Initial Public Offerings. The Journal of Finance, 46(1), 3-27. https://doi.org/10.1111/j.1540-6261.1991.tb03743.x

Rizwan, M., Ahmad, G., & Ashraf, D. (2020). Systemic risk: The impact of COVID-19. Finance Research Letters, 36, 101682. https://doi.org/10.1016/j.frl.2020.101682

Salisu, A. A., & Obiora, K. (2021). COVID-19 pandemic and the crude oil market risk: hedging options with non-energy financial innovations. Financial Innovation, 7(34). https://doi.org/10.1186/s40854-021-00253-1

Schipper, K., & Smith, A. (1983). Effects of recontracting on shareholder wealth: The case of voluntary spin-offs. Journal of Financial Economics, 12(4), 437-467. https://doi.org/10.1016/0304-405X(83)90043-0

Shaikh, I. (2022). Impact of COVID-19 pandemic on the energy markets. Economic Change and Restructuring, 55, 433–484. https://doi.org/10.1007/s10644-021-09320-0

Siu, A., & Wong, R. (2004). Economic Impact of SARS: The Case of Hong Kong. Asian Economic Papers, 3(1), 62–83. https://doi.org/10.1162/1535351041747996

Small, K., Ionici, O., & Zhu, H. (2007). Size Does Matter: An Examination of the Economic Impact of Sarbanes-Oxley. Review of Business, 27(3), 47-55. https://www.proquest.com/docview/220956058

Sorescu, A., Warren, N. L., & Ertekin, L. (2017). Event study methodology in the marketing literature: an overview. Journal of the Academy of Marketing Science, 45, 186-207. https://doi.org/10.1007/s11747-017-0516-y

Stout, L. A. (2003). The Mechanisms of Market Inefficiency: An Introduction to the New Finance. Cornell Law Faculty Publications. Paper 450. http://scholarship.law.cornell.edu/facpub/450

Thomson, L. (2021). Abnormal returns of corporations adopting Bitcoin as a treasury asset: An event study. MSc Behavioural Economics: Master Thesis. Erasmus School of Economics, Erasmus University Rotterdam. https://osf.io/25qg8/download

Tomé, L. C. (2017). La paradoja de la recurrencia. Culturacientifica.com. https://culturacientifica.com/2017/11/07/la-paradoja-la-recurrencia/#:~:text=Seg%C3%BAn%20este%20mito%2C%20la%20historia,una%20forma%20concreta%20por%20casualidad

Velásquez, G. (2009). El impacto de anuncio de eventos en el mercado accionario Colombiano. Maestría en Ciencias en Finanzas, Universidad EAFIT. https://repository.eafit.edu.co/handle/10784/253

Verikios, G., McCaw, J., McVernon, J., & Harris, A. (2012). H1N1 Influenza and the Australian Macroeconomy. Journal of the Asia Pacific Economy, 17(1), 22-51. https://doi.org/10.1080/13547860.2012.639999

Waheed, R., Wei, C., Sarwar, S., & Yulan, L. (2018). Impact of oil prices on firm stock return: industry-wise analysis. Empirical Economics, 55(3), 765–780. https://doi.org/10.1007/s00181-017-1296-4

Wilcoxon, F. (1945). Individual comparison by ranking methods. Biometrics Bulletin, 1(6), 80-83. https://doi.org/10.2307/3001968

Yuen, K., & Lee, T. (2003). Could mood state affect risk-taking decisions? Journal of Affective Disorders, 75(1), 11-18. https://doi.org/10.1016/S0165-0327(02)00022-8

Zhang, D., Hu, M., & Ji, Q. (2020). Financial markets under the global pandemic of COVID-19. Finance Research Letters, 36, 101528. https://doi.org/10.1016/j.frl.2020.101528

Zou, L., & Robert, W. (2017). How important are earnings announcements in China? Pacific Accounting Review, 29(3), 380-396. https://doi.org/10.1108/PAR-02-2017-0011

Reference by

Sistema OJS 3 - Metabiblioteca |