Investors' reactions to COVID-19 related announcements: evidence from the cargo shipping industry

PurposeThe purpose of this study is to examine the impact of the corona virus (COVID-19) pandemic on stock returns of listed cargo shipping companies.Design/methodology/approachThe author employs the events study methodology to examine this phenomenon. A sample of 49 listed cargo shipping companies...

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Bibliographic Details
Published in:Review of behavioral finance 2022-11, Vol.14 (5), p.833-853
Main Author: Marobhe, Mutaju Isaack
Format: Article
Language:English
Subjects:
Behavioral economics
Coronaviruses
COVID-19
Earthquakes
Economic crisis
Efficient markets
Emerging markets
Epidemics
Industrialized nations
International finance
Investments
Pandemics
Rates of return
Securities markets
Shipping industry
Stock exchanges
Stock prices
Terrorism
Tourism
Volatility
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Summary:PurposeThe purpose of this study is to examine the impact of the corona virus (COVID-19) pandemic on stock returns of listed cargo shipping companies.Design/methodology/approachThe author employs the events study methodology to examine this phenomenon. A sample of 49 listed cargo shipping companies in the container, dry bulk and tanker sub-sectors from Asia, North America, and Europe was selected and their daily closing stock prices from 1st January 2020 to 31st December 2020 were utilized.FindingsThe results reveal that there was an overall negative overreaction to the announcement by World Health Organization (WHO) that declared COVID-19 a pandemic. The approvals of USD 857 billion stimulus package by the European Union (EU) and Pfizer vaccine by Food and Drug Administration (FDA) in USA received slight positive reactions. The Greek, Singaporean and Taiwanese shipping stocks were the least affected stocks as their respective shipping industries remained resilient during 2020.Research limitations/implicationsThis study provides evidence to confirm the fact that COVID-19 has affected stock markets; however the impact is un parallel among cargo shipping stocks of different countries.Originality/valueThe majority of studies have conducted country level analyses of the COVID-19 and stock market performance phenomenon. However, there have been sectoral disparities in terms of their susceptibility to economic shocks from COVID-19. This study's focal point is on the cargo shipping sector which synonymous with other sectors has not been immune to the current pandemic. The study also extends the timeline of events to incorporate those from June to December 2020.
ISSN:1940-5979
1940-5987
DOI:10.1108/RBF-04-2021-0071