Abstract
The main task of the article is to examine the impact of the reported impairment of assets (IoA) on the market reaction of investors on the Warsaw Stock Exchange [WSE] in the crisis condition caused by the COVID-19 pandemic. There is a need to verify whether the disclosure of this information in the period of economic downturn will cause a similar negative reaction as in previous topics in this area. Research undertaken in this article helps identify the rules of behaviour (in the short term) whether the reaction of investors on updating the company’s assets in crisis conditions is different than in times of prosperity. The main hypothesis will be verified using the event study methodology. It allows to verify whether the upcoming information about IoA during the COVID-19 pandemic confirms an existence of statistically significant negative abnormal returns. Based on the 55 cases of current reports informing about IoA, which were submitted to the investors in the year 2020 and finally qualified for the research sample, I have not observed statistically significant negative abnormal returns on the adjacent days. The results are different from those obtained by researchers who study the market reaction to the IoA under non-crisis conditions of the economy.
Highlights
The first quarter of 2020 turned out to be the beginning of a difficult period that global economies have had to face, at least since the financial crisis of 2008–2009
The research contribution to the state of knowledge is an attempt to verify how the market will react to such information in a situation when the specter of a serious economic crisis hangs over it, which was caused by the pandemic of COVID-19 (Platje et al 2020)
According to the research hypothesis adopted in the introduction, the announcement of the impairment of assets (IoA) should have a negative impact on the market reaction of investors during the COVID-19 pandemic in 2020
Summary
The first quarter of 2020 turned out to be the beginning of a difficult period that global economies have had to face, at least since the financial crisis of 2008–2009 It was at this time that the COVID-19 pandemic (caused by the SARS-CoV-2 virus) started to spread around the world. Stores were closed, mass events were canceled, and business travel and tourist traffic were halted All these changes occurred in order to prevent the virus from entering new regions as much as possible. Such a significant destabilization of everyday life had a drastic impact on the functioning of the economies of many countries. The first estimates as of May 2020 pointed to a decline in global GDP of up to 3 percent, while some European countries were expected to contract by as much as 7.5 percent (International Monetary Fund 2020)
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