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The impact of COVID-19 pandemic on abnormal returns of insurance firms: a cross-country evidence

Author

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  • Umar Farooq
  • Adeel Nasir
  • Bilal
  • Muhammad Umer Quddoos

Abstract

This research investigates the abnormal returns of 958 insurance companies from Australia, Canada, Germany, USA, UK, Brazil, India, and Indonesia under the COVID-19 scenario. This study deploys the event study methodology to analyse the effects of COVID-19 on stock returns both in the short and long terms. Results reveal that, overall, COVID-19 negatively affected the stock returns, particularly in the case of insurance firms operating in developing countries. This research also explores firm-specific determinants distinguishing the most affected insurance firms. It is found that firm size, systematic risk, price-earnings ratio, profitability, and dividend yield affect the intensity of abnormal returns in response to COVID-19 but in different event windows. The investors and policymakers should consider these factors in connection with the risk mitigating strategies.

Suggested Citation

  • Umar Farooq & Adeel Nasir & Bilal & Muhammad Umer Quddoos, 2021. "The impact of COVID-19 pandemic on abnormal returns of insurance firms: a cross-country evidence," Applied Economics, Taylor & Francis Journals, vol. 53(31), pages 3658-3678, July.
    • Handle: RePEc:taf:applec:v:53:y:2021:i:31:p:3658-3678
    DOI: 10.1080/00036846.2021.1884839
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    Citations

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    Cited by:

    1. Muneer Shaik & Mohd Ziaur Rehman, 2023. "The Dynamic Volatility Connectedness of Major Environmental, Social, and Governance (ESG) Stock Indices: Evidence Based on DCC-GARCH Model," Asia-Pacific Financial Markets, Springer;Japanese Association of Financial Economics and Engineering, vol. 30(1), pages 231-246, March.
    2. Bufalo, Michele & Ceci, Claudia & Orlando, Giuseppe, 2024. "Addressing the financial impact of natural disasters in the era of climate change," The North American Journal of Economics and Finance, Elsevier, vol. 73(C).
    3. Woong Park & Hyunchul Ahn, 2022. "Not All Churn Customers Are the Same: Investigating the Effect of Customer Churn Heterogeneity on Customer Value in the Financial Sector," Sustainability, MDPI, vol. 14(19), pages 1-22, September.
    4. Gupta, Somya & Ghardallou, Wafa & Pandey, Dharen Kumar & Sahu, Ganesh P., 2022. "Artificial intelligence adoption in the insurance industry: Evidence using the technology–organization–environment framework," Research in International Business and Finance, Elsevier, vol. 63(C).
    5. Nataliya Vnukova & Daria Davydenko & Svitlana Achkasova & Olexandr Yagolnitskyi, 2022. "Assessing the Activities of Insurance Companies Due to the Disease of Private Pension," Economic Studies journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 5, pages 179-194.
    6. Maria Carannante & Valeria D’Amato & Paola Fersini & Salvatore Forte & Giuseppe Melisi, 2022. "Disruption of Life Insurance Profitability in the Aftermath of the COVID-19 Pandemic," Risks, MDPI, vol. 10(2), pages 1-16, February.
    7. Željko Vojinović & Sunčica Milutinović & Dario Sertić & Bojan Leković, 2022. "Determinants of Sustainable Profitability of the Serbian Insurance Industry: Panel Data Investigation," Sustainability, MDPI, vol. 14(9), pages 1-22, April.
    8. Xuelian Li & Shiu-Chieh Chiu & Jyh-Horng Lin & Yuxin Xie, 2024. "Assessing insurer guarantee cover and risk retention toward SDG 3: a structure-break down-and-out call valuation," Palgrave Communications, Palgrave Macmillan, vol. 11(1), pages 1-10, December.
    9. Karolina Puławska, 2021. "Financial Stability of European Insurance Companies during the COVID-19 Pandemic," JRFM, MDPI, vol. 14(6), pages 1-16, June.

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