COVID-19 pandemic and stock market response: A culture effect

Impact of COVID-19 on Performance Evaluation Large Market Capitalization Stocks and Open Innovation

“…Research related to the COVID-19 pandemic can be said to be an event study because the market reacts to events that occur and the market can react positively or negatively depending on what actions are taken on an event. Changes in cultural aspects (low individualism) and the government's concern for COVID-19 gave a negative signal to the movement of abnormal returns in the first week after the announcement [26]. The findings of Xu [27] prove that price movements and stock returns on the Canadian and US stock markets responded negatively and asymmetrically due to COVID-19.…”

“…Another factor that responds to the volatility of share prices due to the COVID-19 pandemic is the cultural aspects of society, including reducing the sense of individualism and avoiding the tendency of uncertainty. Countries with a low level of individualism and high risk of rejection are able to significantly reduce the volatility of abnormal returns when compared to countries with high levels of individualism and low risk of rejection [26]. Based on the discussion section, the participation of all people, both as investors and the public in investment activities, is expected to contribute to economic recovery from the implementation of open innovation, which provides strategic steps and the best solutions during the COVID-19 pandemic.…”

Organizational Resources, Country Institutions, and National Culture Behind Firm Survival and Growth during COVID-19

“…Among the six, uncertainty avoidance, long-term orientation, and individualism are the most examined in the context of the pandemic. High uncertainty avoidance has been linked to larger stock market declines (Ashraf 2020a;Fernandez-Perez et al 2021). Long-term orientation is commonly linked with smaller stock market declines, as long-term oriented investors can better understand the transient nature of the pandemic, and hence, are unlikely to overreact (Hofstede, 2020;Zaremba et al, 2021).…”

“…Long-term orientation is commonly linked with smaller stock market declines, as long-term oriented investors can better understand the transient nature of the pandemic, and hence, are unlikely to overreact (Hofstede, 2020;Zaremba et al, 2021). Concerning the effect of individualism, some scholars find that more individualistic countries suffer smaller stock market declines (Fernandez-Perez et al, 2021), while others find the opposite (Kaczmarek et al, 2020). These studies mainly focus on the effects of culture on stock markets.…”

“…The corporate immunity literature has not shown a consensus regarding the impact of democracy and institutional quality in the pandemic. Fernandez-Perez et al (2021) and Fang et al (2020) show that democratic governments and low political corruption are linked to smaller market declines and lower mortality rates during the pandemic. Erdem (2020) find that political and economic freedom, especially the freedom of expression, alleviate the negative relation between the severity of the pandemic and stock returns.…”