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Product line transformation, foreign sales, and firm value: Evidence from COVID-19 pandemic governance in urban China

Using a sample of Chinese firms, we examine stock market reaction to firms that announce a change in their product lines to those related to COVID-19 management (medical masks and ventilators, among others). We find the market reacts positively to the announcements. In addition, when a firm ordinari...

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Detalles Bibliográficos
Autores principales: Wang, Liangliang, Yu, Junli, Chan, Kam C.
Formato: Online Artículo Texto
Lenguaje:English
Publicado: Elsevier B.V. 2021
Materias:
Acceso en línea:https://www.ncbi.nlm.nih.gov/pmc/articles/PMC9755997/
https://www.ncbi.nlm.nih.gov/pubmed/36540340
http://dx.doi.org/10.1016/j.ribaf.2021.101487
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author Wang, Liangliang
Yu, Junli
Chan, Kam C.
author_facet Wang, Liangliang
Yu, Junli
Chan, Kam C.
author_sort Wang, Liangliang
collection PubMed
description Using a sample of Chinese firms, we examine stock market reaction to firms that announce a change in their product lines to those related to COVID-19 management (medical masks and ventilators, among others). We find the market reacts positively to the announcements. In addition, when a firm ordinarily has a large share of export sales, the stock market reaction is more salient, indicating that export sales provide a certification effect that positively signals investors. Additional analysis on moderating effects suggest that, conditional on foreign sales, prior experience with medical product lines or less uncertainty about supply availability enhances the cumulative announcement returns (CARs), while the adverse impact of firm size on CAR magnifies.
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spelling pubmed-97559972022-12-16 Product line transformation, foreign sales, and firm value: Evidence from COVID-19 pandemic governance in urban China Wang, Liangliang Yu, Junli Chan, Kam C. Res Int Bus Finance Article Using a sample of Chinese firms, we examine stock market reaction to firms that announce a change in their product lines to those related to COVID-19 management (medical masks and ventilators, among others). We find the market reacts positively to the announcements. In addition, when a firm ordinarily has a large share of export sales, the stock market reaction is more salient, indicating that export sales provide a certification effect that positively signals investors. Additional analysis on moderating effects suggest that, conditional on foreign sales, prior experience with medical product lines or less uncertainty about supply availability enhances the cumulative announcement returns (CARs), while the adverse impact of firm size on CAR magnifies. Elsevier B.V. 2021-12 2021-07-03 /pmc/articles/PMC9755997/ /pubmed/36540340 http://dx.doi.org/10.1016/j.ribaf.2021.101487 Text en © 2021 Elsevier B.V. All rights reserved. Since January 2020 Elsevier has created a COVID-19 resource centre with free information in English and Mandarin on the novel coronavirus COVID-19. The COVID-19 resource centre is hosted on Elsevier Connect, the company's public news and information website. Elsevier hereby grants permission to make all its COVID-19-related research that is available on the COVID-19 resource centre - including this research content - immediately available in PubMed Central and other publicly funded repositories, such as the WHO COVID database with rights for unrestricted research re-use and analyses in any form or by any means with acknowledgement of the original source. These permissions are granted for free by Elsevier for as long as the COVID-19 resource centre remains active.
spellingShingle Article
Wang, Liangliang
Yu, Junli
Chan, Kam C.
Product line transformation, foreign sales, and firm value: Evidence from COVID-19 pandemic governance in urban China
title Product line transformation, foreign sales, and firm value: Evidence from COVID-19 pandemic governance in urban China
title_full Product line transformation, foreign sales, and firm value: Evidence from COVID-19 pandemic governance in urban China
title_fullStr Product line transformation, foreign sales, and firm value: Evidence from COVID-19 pandemic governance in urban China
title_full_unstemmed Product line transformation, foreign sales, and firm value: Evidence from COVID-19 pandemic governance in urban China
title_short Product line transformation, foreign sales, and firm value: Evidence from COVID-19 pandemic governance in urban China
title_sort product line transformation, foreign sales, and firm value: evidence from covid-19 pandemic governance in urban china
topic Article
url https://www.ncbi.nlm.nih.gov/pmc/articles/PMC9755997/
https://www.ncbi.nlm.nih.gov/pubmed/36540340
http://dx.doi.org/10.1016/j.ribaf.2021.101487
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