Investment, Q and epidemic diseases

Financ Res Lett. 2022 Jun:47:102943. doi: 10.1016/ Epub 2022 May 11.


We study the effects of epidemic diseases on corporate investment. Epidemic diseases tend to be unanticipated and exogenous to firms' decisions. Using difference-in-difference estimation strategy and a firm-level exposure to an epidemic disease measure, we find that corporate investment declines significantly following the onset of an epidemic disease. We also show that the COVID-19 pandemic has the strongest negative impact on investment when compared to the other most recent epidemic diseases.

Keywords: COVID-19; Capital expenditure; Ebola; H1N1; Pandemic; SARS; Zika.