Investors' reactions to COVID-19 related announcements: evidence from the cargo shipping industry

Abstract

Purpose

The purpose of this study is to examine the impact of the corona virus (COVID-19) pandemic on stock returns of listed cargo shipping companies.

Design/methodology/approach

The author employs the events study methodology to examine this phenomenon. A sample of 49 listed cargo shipping companies in the container, dry bulk and tanker sub-sectors from Asia, North America, and Europe was selected and their daily closing stock prices from 1st January 2020 to 31st December 2020 were utilized.

Findings

The results reveal that there was an overall negative overreaction to the announcement by World Health Organization (WHO) that declared COVID-19 a pandemic. The approvals of USD 857 billion stimulus package by the European Union (EU) and Pfizer vaccine by Food and Drug Administration (FDA) in USA received slight positive reactions. The Greek, Singaporean and Taiwanese shipping stocks were the least affected stocks as their respective shipping industries remained resilient during 2020.

Research limitations/implications

This study provides evidence to confirm the fact that COVID-19 has affected stock markets; however the impact is un parallel among cargo shipping stocks of different countries.

Originality/value

The majority of studies have conducted country level analyses of the COVID-19 and stock market performance phenomenon. However, there have been sectoral disparities in terms of their susceptibility to economic shocks from COVID-19. This study's focal point is on the cargo shipping sector which synonymous with other sectors has not been immune to the current pandemic. The study also extends the timeline of events to incorporate those from June to December 2020.

Citation

Marobhe, M.I. (2022), "Investors' reactions to COVID-19 related announcements: evidence from the cargo shipping industry", Review of Behavioral Finance, Vol. 14 No. 5, pp. 833-853. https://doi.org/10.1108/RBF-04-2021-0071