Hostname: page-component-cd9895bd7-mkpzs Total loading time: 0 Render date: 2024-12-25T18:09:33.907Z Has data issue: false hasContentIssue false

COVID-19 Vaccinations, Business Activity, and Firm Value

Published online by Cambridge University Press:  15 April 2024

John M. Bizjak
Affiliation:
Texas Christian University Neeley School of Business [email protected]
Swaminathan L. Kalpathy*
Affiliation:
Texas Christian University Neeley School of Business
Vassil T. Mihov
Affiliation:
Texas Christian University Neeley School of Business [email protected]
Jue Ren
Affiliation:
Texas Christian University Neeley School of Business [email protected]
*
[email protected] (corresponding author)
Rights & Permissions [Opens in a new window]

Abstract

Core share and HTML view are not available for this content. However, as you have access to this content, a full PDF is available via the ‘Save PDF’ action button.

Using establishment-level data, we show that COVID-19 vaccinations boost business activity and firm performance in the United States. A 10-percent increase in vaccination rates results in a 4-percent to 6-percent increase in customer visits. We document the channels through which vaccinations increase store visits and the limits to the effect of vaccines on business activity. At the firm level, vaccinations increase sales and earnings, impact expansion decisions, and decrease probability of default, but the benefits vary across businesses. Vaccinations create private economic benefits to firms, shareholders, and employees, in addition to their intended public health benefits.

Type
Research Article
Copyright
© The Author(s), 2024. Published by Cambridge University Press on behalf of the Michael G. Foster School of Business, University of Washington

Footnotes

We thank an anonymous referee, Vishal Ahuja, Vladimir Atanasov, Shaen Corbet, David Dicks, Stuart Gillan, Umit Gurun, Jarrad Harford (the editor), Mark Houston, Paul Irvine, Darius Miller, Tarun Patel, Mahesh Subramony, Neven Valev, Kumar Venkataraman, James Weston, Feng Zhang, the participants at the NBER Longer-Term Health and Economic Effects of COVID-19 Conference, Lone Star Finance Symposium, the Inaugural Colloquium on Financial Economics at Sofia University, Boca Corporate Finance and Governance Conference, Dewey Research Seminar Series, IFABS Conference at Oxford University, Auburn University, Baylor University, Georgia State University, SMU-TCU joint seminar, and UNT seminar for their constructive comments and suggestions. We thank Dewey for generously providing the SafeGraph data on store traffic and Evan Barry for his help with the data. Bizjak acknowledges research support from the Robert and Maria Lowdon Chair in Business Administration. Mihov acknowledges research support from the LKCM Center for Financial Studies and the Beasley Fellowship.

References

Acharya, V. V.; Johnson, T. C.; Sundaresan, S. M.; and Zheng, S.. “The Value of a Cure: An Asset Pricing Perspective.” NBER Working Paper No. 28127 (2021).CrossRefGoogle Scholar
Agarwal, R.; Dugas, M.; Ramaprasad, J.; Luo, J.; Li, G.; and Gao, G. (Gordon). “Socioeconomic Privilege and Political Ideology are Associated with Racial Disparity in COVID-19 Vaccination.” PNAS, 118 (2021), e2107873118.CrossRefGoogle ScholarPubMed
Aum, S.; Lee, S. Y. (Tim); and Shin, Y.. “Inequality of Fear and Self-Quarantine: Is There a Trade-Off Between GDP and Public Health?Journal of Public Economics, 194 (2021), 104354.CrossRefGoogle Scholar
Bharath, S. T., and Shumway, T.. “Forecasting Default with the Merton Distance to Default Model.” Review of Financial Studies, 21 (2008), 13391369.CrossRefGoogle Scholar
Bizjak, J.; Kalpathy, S.; Mihov, V.; and Ren, J.. “CEO Political Leanings and Store-Level Economic Activity during COVID-19 Crisis: Effects on Shareholder Value and Public Health.” Journal of Finance, 77 (2022), 29492986.CrossRefGoogle ScholarPubMed
Cohn, J. B.; Liub, Z.; and Wardlaw, M. I.. “Count (and Count-like) Data in Finance.” Journal of Financial Economics, 146 (2022), 529551.CrossRefGoogle Scholar
Correia, S.; Luck, S.; and Verner, E.. “Pandemics Depress the Economy, Public Health Interventions Do Not: Evidence from the 1918 Flu.” Journal of Economic History, 82 (2022), 917957.CrossRefGoogle Scholar
Deb, P.; Furceri, D.; Jimenez, D.; Kothari, S.; Ostry, J. D.; and Tawk, N.. “The Effects of COVID-19 Vaccines on Economic Activity.” Swiss Journal of Economics and Statistics, 158 (2022), 1–25.Google Scholar
Gagnon, J.; Kamin, S. B.; and Kearns, J.. “The Impact of the COVID-19 Pandemic on Global GDP Growth.” Journal of the Japanese and International Economies, 68 (2023), 101258.CrossRefGoogle Scholar
Gibson, J.Jabbing the Economy Back to Life?Applied Economics Letters, 30 (2022), 2999.CrossRefGoogle Scholar
Goolsbee, A., and Syverson, C.. “Fear, Lockdown, and Diversion: Comparing Drivers of Pandemic Economic Decline.” Journal of Public Economics, 193 (2021), 18.CrossRefGoogle ScholarPubMed
Hamel, L.; Sparks, G.; and Brodie, M.. “Kaiser Family Foundation COVID-19 Vaccine Monitor: February 2021.” Kaiser Family Foundation Survey (2021).Google Scholar
Hansen, N.-J. H., and Mano, R. C.. “COVID-19 Vaccines: A Shot in the Arm for the Economy.” IMF Economic Review, 71 (2023), 148169.Google Scholar
Harris, J. E.COVID-19 Incidence and Hospitalization During the Delta Surge were Inversely Related to Vaccination Coverage Among the Most Populous U.S. Counties.” Health Policy and Technology, 11 (2022), 100583.CrossRefGoogle ScholarPubMed
Kates, J.; Tolbert, J.; and Orgera, K.. “The Red/Blue Divide in COVID-19 Vaccination Rates.” Kaiser Family Foundation Survey (2021).Google Scholar
Kim, O. S.; Parker, J. A.; and Schoar, A.. “Revenue Collapses and the Consumption of Small Business Owners in the Early Stages of the COVID-19 Pandemic.” NBER Working Paper No. 28151 (2020).CrossRefGoogle Scholar
Minton, B. A., and Schrand, C.. “The Impact of Cash Flow Volatility on Discretionary Investment and the Costs of Debt and Equity Financing.” Journal of Financial Economics, 54 (1999), 423460.CrossRefGoogle Scholar
Myers, S. C.Determinants of Corporate Borrowing.” Journal of Financial Economics, 5 (1977), 147175.CrossRefGoogle Scholar
Spiegel, M., and Tookes, H.. “Business Restrictions and COVID Fatalities.” Review of Financial Studies, 34 (2021), 52665308.CrossRefGoogle Scholar
Spiegel, M., and Tookes, H.. “All or Nothing? Partial Business Shutdowns and COVID-19 Fatality Growth.” PLoS One, 17 (2022), e0262925.CrossRefGoogle ScholarPubMed
Stulz, R. M.Managerial Discretion and Optimal Financing Policies.” Journal of Financial Economics, 26 (1990), 327.CrossRefGoogle Scholar
Tito, M. D., and Sexton, A.. “The Vaccine Boost: Quantifying the Impact of the COVID-19 Vaccine Rollout on Measures of Activity.” Finance and Economics Discussion Series Paper No. 2022-035, Federal Reserve System (2022). Federal Reserve Board.CrossRefGoogle Scholar
Vilches, T. N.; Moghadas, S. M.; Sah, P.; Fitzpatrick, M. C.; Shoukat, A.; Pandey, A.; and Galvani, A. P.. “COVID-19 Infections, Hospitalizations, and Deaths Following the US Vaccination Campaigns During the Pandemic.” JAMA Netw Open, 5 (2022), e2142725.CrossRefGoogle ScholarPubMed
Watson, O. J.; Barnsley, G.; Toor, J.; Hogan, A.; Winskill, P.; and Ghani, A. C.. “Global Impact of the First Year of COVID-19 Vaccination: A Mathematical Modelling Study.” Lancet Infectious Diseases, 22 (2022), 12931302.CrossRefGoogle ScholarPubMed
Supplementary material: File

Bizjak et al. supplementary material

Bizjak et al. supplementary material
Download Bizjak et al. supplementary material(File)
File 192.4 KB