COVID-19, a blessing in disguise for the Tech sector: Evidence from stock price crash risk

Ashrafee T Hossain; Abdullah-Al Masum; Jian Xu

doi:10.1016/j.ribaf.2023.101938

COVID-19, a blessing in disguise for the Tech sector: Evidence from stock price crash risk

Res Int Bus Finance. 2023 Apr:65:101938. doi: 10.1016/j.ribaf.2023.101938. Epub 2023 Mar 30.

Authors

Ashrafee T Hossain¹, Abdullah-Al Masum², Jian Xu³

Affiliations

¹ Faculty of Business Administration, Memorial University of Newfoundland, St. John's, NL A1B 3×5, Canada.
² UWO College of Business, University of Wisconsin - Oshkosh, 800 Algoma Blvd, Oshkosh, WI 54901, USA.
³ Robbins College of Business and Entrepreneurship, Fort Hays State University, 600 Park St, Hays, KS 67601, USA.

Abstract

In this paper we document that although COVID-19 has brought uncertainties to the overall economy, the Technology (tech) sector is the systematic beneficiary of the pandemic. Using a quasi-natural setup, we find a significant notion that the Stock Price Crash Risk (SPCR) of firms within the Tech sector decreases during the COVID-19 pandemic compared to the recent past and firms belonging to other sectors. Our analyses further reveal that firms in the Tech sector with stronger external monitoring and better information environment receive an even greater advantage from the pandemic. Overall, our study suggests that the higher systemic dependency on the Tech sector during the COVID-19 outbreak results in an economic benefit for this sector.

Keywords: COVID-19; Stock price crash risk; Tech sector; Uncertainty.