IDEAS home Printed from https://ideas.repec.org/a/ers/journl/vxxivy2021i3bp482-496.html
   My bibliography  Save this article

Stock Market Reaction at the WHO’s Announcement of a Pandemic due to COVID-19 of the French Pharmaceuticals

Author

Listed:
  • Katerina Lyroudi
  • Sotirios Nikolopoulos

Abstract

Purpose: The year 2020 was hit by a unique economic crisis due to disease, Covid-19. It was first identified in December 2019 in China. The WHO, on March 11th, 2020, declared the Covid-19 a pandemic. This research paper aims to investigate the market reaction of the pharmaceutical companies in France on the day that WHO announced the Covid-19 disease to be a pandemic. Design/Methodology/Approach: We apply the classical event study methodology for our purpose. We selected this sector because we considered that a health crisis such big as the coronavirus pandemic would, of course, affect all the industries in various degrees. Still, it will strongly influence the pharmaceutical sector that also has the opportunity/chance of finding a cure (medicines and vaccines) to this disease and stop the crisis. It seems to be the only industry that can fight back such a crisis by finding a cure. Findings: The results show a strong adverse reaction upon this announcement in pharmaceutical companies in contrast to our hypothesis. The French investors perceived this announcement as a negative signal that will affect almost every economic sector, including the pharmaceutical companies. However, since March 18th, 2020, the second day of the government imposed total lockdown, the market reaction turned positive and significant. Practical Implications: The results of this research may be useful for Government decision makers, investors and pharmaceutical companies in order to optimize their strategies and improve their responses to the ongoing pandemic crisis. Originality/Value: The results of this study will be helpful not only to the academicians by enriching the pertinent literature and the politicians and the practitioners. They can benefit from focusing on this sector and determine the appropriate policies and measures for its growth in finding the means to fight this health crisis.

Suggested Citation

  • Katerina Lyroudi & Sotirios Nikolopoulos, 2021. "Stock Market Reaction at the WHO’s Announcement of a Pandemic due to COVID-19 of the French Pharmaceuticals," European Research Studies Journal, European Research Studies Journal, vol. 0(3B), pages 482-496.
    • Handle: RePEc:ers:journl:v:xxiv:y:2021:i:3b:p:482-496
    as

    Download full text from publisher

    File URL: https://ersj.eu/journal/2477/download
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Brown, Stephen J. & Warner, Jerold B., 1985. "Using daily stock returns : The case of event studies," Journal of Financial Economics, Elsevier, vol. 14(1), pages 3-31, March.
    2. Julien Chevallier, 2020. "COVID-19 Pandemic and Financial Contagion," JRFM, MDPI, vol. 13(12), pages 1-25, December.
    3. Xiaolin Huo & Zhigang Qiu, 2020. "How does China’s stock market react to the announcement of the COVID-19 pandemic lockdown?," Economic and Political Studies, Taylor & Francis Journals, vol. 8(4), pages 436-461, October.
    4. Scott R Baker & Nicholas Bloom & Steven J Davis & Kyle Kost & Marco Sammon & Tasaneeya Viratyosin & Jeffrey Pontiff, 0. "The Unprecedented Stock Market Reaction to COVID-19," The Review of Asset Pricing Studies, Society for Financial Studies, vol. 10(4), pages 742-758.
    5. Stefano Ramelli & Alexander F Wagner, 2020. "Feverish Stock Price Reactions to COVID-19," The Review of Corporate Finance Studies, Society for Financial Studies, vol. 9(3), pages 622-655.
    6. Fanelli, Duccio & Piazza, Francesco, 2020. "Analysis and forecast of COVID-19 spreading in China, Italy and France," Chaos, Solitons & Fractals, Elsevier, vol. 134(C).
    7. Stefano Ramelli & Alexander F Wagner, 0. "Feverish Stock Price Reactions to COVID-19," Review of Corporate Finance Studies, Oxford University Press, vol. 9(3), pages 622-655.
    8. Sumedha Gupta & Kosali I. Simon & Coady Wing, 2020. "Mandated and Voluntary Social Distancing During The COVID-19 Epidemic: A Review," NBER Working Papers 28139, National Bureau of Economic Research, Inc.
    9. Paul Malliet & Frédéric Reynès & Gissela Landa & Meriem Hamdi-Cherif & Aurélien Saussay, 2020. "Assessing Short-Term and Long-Term Economic and Environmental Effects of the COVID-19 Crisis in France," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 76(4), pages 867-883, August.
    10. Ozili, Peterson & Arun, Thankom, 2020. "Spillover of COVID-19: Impact on the Global Economy," MPRA Paper 99317, University Library of Munich, Germany.
    11. Hee Soo Lee, 2020. "Exploring the Initial Impact of COVID-19 Sentiment on US Stock Market Using Big Data," Sustainability, MDPI, vol. 12(16), pages 1-19, August.
    12. repec:hal:spmain:info:hdl:2441/6neh4df2kq9orrjiscv6839f6n is not listed on IDEAS
    13. Pinglin He & Hanlu Niu & Zhe Sun & Tao Li, 2020. "Accounting Index of COVID-19 Impact on Chinese Industries: A Case Study Using Big Data Portrait Analysis," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 56(10), pages 2332-2349, August.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Yashraj Varma & Renuka Venkataramani & Parthajit Kayal & Moinak Maiti, 2021. "Short-Term Impact of COVID-19 on Indian Stock Market," JRFM, MDPI, vol. 14(11), pages 1-15, November.
    2. Jialei Jiang & Eun-Mi Park & Seong-Taek Park, 2021. "The Impact of the COVID-19 on Economic Sustainability—A Case Study of Fluctuation in Stock Prices for China and South Korea," Sustainability, MDPI, vol. 13(12), pages 1-17, June.
    3. Wang, Zhixuan & Dong, Yanli & Liu, Ailan, 2022. "How does China's stock market react to supply chain disruptions from COVID-19?," International Review of Financial Analysis, Elsevier, vol. 82(C).
    4. Aharon, David Y. & Siev, Smadar, 2021. "COVID-19, government interventions and emerging capital markets performance," Research in International Business and Finance, Elsevier, vol. 58(C).
    5. Rasa Kanapickiene & Deimante Teresiene & Daiva Budriene & Greta Keliuotytė-Staniulėnienė & Jekaterina Kartasova, 2020. "The Impact Of Covid-19 On European Financial Markets And Economic Sentiment," Economy & Business Journal, International Scientific Publications, Bulgaria, vol. 14(1), pages 144-163.
    6. Eachempati, Prajwal & Srivastava, Praveen Ranjan & Panigrahi, Prabin Kumar, 2021. "Sentiment Analysis of COVID-19 Pandemic on the Stock Market," American Business Review, Pompea College of Business, University of New Haven, vol. 24(1), pages 141-165, May.
    7. Zofia Gródek-Szostak & Jadwiga Adamczyk & Małgorzata Luc & Marcin Suder & Justyna Tora & Karolina Kotulewicz-Wisińska & Wojciech Zysk & Anna Szeląg-Sikora, 2022. "Hard Cash in Hard Times—The Effect of Institutional Support for Businesses Shaken by COVID-19," Sustainability, MDPI, vol. 14(8), pages 1-18, April.
    8. Rao, Purnima & Goyal, Nisha & Kumar, Satish & Hassan, M. Kabir & Shahimi, Shahida, 2021. "Vulnerability of financial markets in India: The contagious effect of COVID-19," Research in International Business and Finance, Elsevier, vol. 58(C).
    9. Roddy Allan & Ervi Liusman & Teddy Lu & Desmond Tsang, 2021. "The COVID-19 Pandemic and Commercial Property Rent Dynamics," JRFM, MDPI, vol. 14(8), pages 1-24, August.
    10. Farzami, Yasmine & Gregory-Allen, Russell & Molchanov, Alexander & Sehrish, Saba, 2021. "COVID-19 and the liquidity network," Finance Research Letters, Elsevier, vol. 42(C).
    11. Md. Mahmudul Alam & Haitian Wei & Abu N. M. Wahid, 2021. "COVID‐19 outbreak and sectoral performance of the Australian stock market: An event study analysis," Australian Economic Papers, Wiley Blackwell, vol. 60(3), pages 482-495, September.
    12. Ducret, Romain, 2021. "Investors' perception of business group membership during an economic crisis : Evidence from the COVID-19 pandemic," FSES Working Papers 524, Faculty of Economics and Social Sciences, University of Freiburg/Fribourg Switzerland.
    13. Andrieș, Alin Marius & Ongena, Steven & Sprincean, Nicu, 2021. "The COVID-19 Pandemic and Sovereign Bond Risk," The North American Journal of Economics and Finance, Elsevier, vol. 58(C).
    14. Peng-Fei Dai & Xiong Xiong & Zhifeng Liu & Toan Luu Duc Huynh & Jianjun Sun, 2021. "Preventing crash in stock market: The role of economic policy uncertainty during COVID-19," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 7(1), pages 1-15, December.
    15. Di Shang & Chang Yu & Gang Diao, 2021. "Study on Impacts of COVID-19 Pandemic Recession Based on Monte Carlo Simulation," Prague Economic Papers, Prague University of Economics and Business, vol. 2021(6), pages 724-747.
    16. Navratil, Robert & Taylor, Stephen & Vecer, Jan, 2021. "On equity market inefficiency during the COVID-19 pandemic," International Review of Financial Analysis, Elsevier, vol. 77(C).
    17. Ricardo J. Caballero & Alp Simsek, 2024. "Monetary Policy and Asset Price Overshooting: A Rationale for the Wall/Main Street Disconnect," Journal of Finance, American Finance Association, vol. 79(3), pages 1719-1753, June.
    18. Smales, L.A., 2021. "Investor attention and global market returns during the COVID-19 crisis," International Review of Financial Analysis, Elsevier, vol. 73(C).
    19. Demirgüç-Kunt, Asli & Pedraza, Alvaro & Ruiz-Ortega, Claudia, 2021. "Banking sector performance during the COVID-19 crisis," Journal of Banking & Finance, Elsevier, vol. 133(C).
    20. Contessi, Silvio & De Pace, Pierangelo, 2021. "The international spread of COVID-19 stock market collapses," Finance Research Letters, Elsevier, vol. 42(C).

    More about this item

    Keywords

    Financial crises; event study; covid-19; health-care markets.;
    All these keywords.

    JEL classification:

    • G01 - Financial Economics - - General - - - Financial Crises
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ers:journl:v:xxiv:y:2021:i:3b:p:482-496. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Marios Agiomavritis (email available below). General contact details of provider: https://ersj.eu/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.