Stock markets' reaction to Covid 19: Moderating role of national culture
Abstract Recent literature reports stock markets around the world reacted to the Covid 19 pandemic with negative returns. However, this reaction was not uniform across countries. In this paper, we postulate that the national level uncertainty avoidance, which determines how sensitive members of a nation are to uncertainty, moderates the stock markets' reaction to the pandemic. Using daily data of Covid 19 confirmed cases and stock market returns from 43 countries, we find robust evidence that the decline in stock market returns in response to one percent increase in growth in confirmed cases is stronger for the countries with higher national level uncertainty aversion.
Finance Research Letters