The dark side of globalization: Evidence from the impact of COVID-19 on multinational companies

• 成果类型: Article
• 署名作者: Guedhami, Omrane; Knill, April; Megginson, William L.; Senbet, Lemma W.
• 署名单位: University of South Carolina System; University of South Carolina Columbia; Sungkyunkwan University (SKKU); State University System of Florida; Florida State University; University of Oklahoma System; University of Oklahoma - Norman; University of International Business & Economics; University System of Maryland; University of Maryland College Park
• 刊物名称: JOURNAL OF INTERNATIONAL BUSINESS STUDIES
• ISSN/ISSBN: 0047-2506
• DOI: 10.1057/s41267-022-00540-8
• 发表日期: 2022
• 页码: 1603-1640
• 关键词: covid-19; pandemic; multinational corporation; International diversification; Financial crisis; healthcare crisis; economic performance; business efficiency; government response; government efficiency

摘要

The COVID-19 pandemic has led to economic and health crises (twin crises) worldwide. Using a sample of firms from 73 countries over the period January to December 2020, we examine stock price reactions of multinational corporations (MNCs) and purely domestic companies (DCs) to the crisis. We find that, on average, MNCs suffer a significantly larger decline in firm value relative to DCs during the stock market crisis caused by the pandemic with notable heterogeneity in this underperformance across both industry and region. The evidence of MNC underperformance is robust to using abnormal returns, an alternative crisis window, a matched sample that accounts for differences in characteristics between MNCs and DCs, alternative model specifications, and alternative proxies for multinationality. Further analysis on the effect of government responses on the valuation gap suggests that stringent government responses exacerbate MNCs' underperformance. Finally, we show that a stronger financial system mitigates negative crisis returns, especially under stringent government responses, while real factors, such as the firm's supply chain, investments in human capital, research and development, exacerbate negative crisis returns. Our findings have important implications for managers of MNCs and government policymakers alike and contribute to studies on the international diversification-performance relation by demonstrating a dark side of globalization during a tail-risk event.