Cash, crisis, and capers: The UK's cashbox policy during COVID-19

Abstract

This study investigates the market impact of the “Cashbox” policy introduced in the UK during the COVID-19 pandemic, which eased shareholder approval norms for equity issuances. Using manually collected data, we find that Cashbox issue announcements yield abnormal returns 4–6 % higher than other issuances, indicating that investors prioritise liquidity over agency concerns during the pandemic. Notably, this effect is more pronounced in firms facing greater financial constraints or exhibiting superior corporate governance. Our study sheds light on the impact of crisis-driven policy changes on financial markets, providing important and timely implications for policymakers and investors on the trade-off between rapid capital access and governance standards in times of significant social crises.