European Journal of Accounting, Auditing and Finance Research (EJAAFR)

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The market reaction to COVID-19: European Evidence


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.

Citation:  Loizides G.,  Charitou  M., and  Lois P. (2023) The market reaction to COVID-19: European Evidence, European Journal of Accounting, Auditing and Finance Research, Vol.11, No. 3, pp.27-53

Keywords: Covid-19 pandemic; returns performance; Europe; market reaction, Event Study

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This work by European American Journals is licensed under a Creative Commons Attribution-NonCommercial-NoDerivs 4.0 Unported License


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