The Effect of SARS Outbreak on Corporate Investments
Purpose: This study examines the impact of pandemics on corporate investments using the severe acute respiratory syndrome (SARS) outbreak as the variable of interest and firm-level capital expenditures, acquisition expenses, and research and development expenditures as proxies for corporate investments. Methodology/Design/Approach: Our sample consists of firms listed in the Shenzhen, Shanghai, Hong Kong, and Toronto stock exchanges from 1999 to 2019. Findings: We find that the SARS outbreak had no significant impact on the capital expenditure, acquisitions, or research and development expenses of the firms listed in Canada. SARS also had no significant effect on the Chinees firms’ capital expenditure and acquisitions expenses but increased their research and development expenses. Practical Implications: Understanding this relationship helps firms to modify their corporate investment strategies. Originality/Value: Investigating this relationship is important because of the significant risk’s pandemics impose upon firms and the global economy. This study adds to the stream of research investigating the impact of exogenous shocks on corporate investments.