An Examination of the Effect of the Coronavirus Pandemic on Firm Value in Egypt: A Panel PMG/ARDL Approach

Document Type

Article

Publication Date

9-15-2022

Abstract

This study investigates the short-and long-term consequences of coronavirus-induced declines in firm activity on firm value. This association was explored explicitly at both the market and industry levels. The panel data covers the period from March 19,2020,to June 25,2020,for 136 publicly traded non-financial companies. The panel pooling mean group/Autoregressive Distributed Lag estimate method is utilized to investigate the Coronavirus's short-and long-term effects on firm value. The primary findings indicate that the pandemic negatively impacted the daily stock returns of all industries besides healthcare. This outcome could be ascribed to a 24,3 percent increase in Egyptian healthcare spending in 2019/20 to assure the development of robust and adaptable healthcare systems able to withstand economic downturns like the one experienced during the epidemic. Moreover, the real estate and cyclical consumer sectors were most affected over the long term. The results may be explained by the notion that, during economic downturns, individuals prioritize spending on non-durable goods that are essential for day-to-day survival. This study contributes to the literature on financial accounting by explicating how real shocks affect the value of a company in a country with an emerging economy.

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