This study investigates the impact of modern health pandemics on the firm’s stock price crash risk. Further, the study explores this problem using a comprehensive cross-country sample of 265,983 firm-year observations, collected from 39 countries during the five modern health crises: SARS (2003), H1N1 (2009), MERS (2012), Ebola (2014), and Zika (2016). Empirically, this study observes that the outbreak of pandemic crises curbs the crash risk of stock price. The more stable country is protected by the regulatory system, and the decrease in crash risk is smaller during the pandemic. The conclusions will enable the investors to trade with greater rationality and objectivity during the current pandemic situation caused by COVID-19. In addition, these conclusions make regulators confident that establishing a sound regulatory and legal system and maintaining national stability effectively reduce the impact of a sudden public crisis on the capital market.
Modern health pandemic crises and stock price crash risk