COVID-19 and Corporate Finance

COVID-19 and Corporate Finance

Marco Pagano, Josef Zechner

Series number :

Serial Number: 

Date posted :

August 22 2022

Last revised :

August 22 2022
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  • COVID-19 • 
  • Pandemic • 
  • firm resilience • 
  • social distancing • 
  • financial flexibility • 
  • corporate culture • 
  • Credit Supply • 
  • leverage • 
  • government support • 
  • public loan guarantees • 
  • Paycheck Protection Program

We distill evidence about the effects of COVID-19 on companies. Stock price reactions to the shock differed greatly across firms, depending on their resilience to social distancing, financial flexibility, and corporate culture. The same characteristics affected the response of firms' sales, employment, and asset growth.

Despite the shock, firms expanded their balance sheets and liquidity by raising funds from banks, bonds, and equity markets. While listed firms reduced their leverage, unlisted ones, especially small and medium enterprises, increased it. Government support programs helped firms access external funding. We conclude by identifying unexplored research issues regarding the long-run effects of COVID-19 on companies.


Research Member
Department of Business Administration, University of Vienna