Market reactions to drugs price reduction during COVID-19 distress in an emerging economy: value creation through CSR

Purpose The coronavirus (COVID-19) is the worst pandemic in recent memory in terms of its economic and social impacts. Deadly second wave of COVID-19 in India shook the country and reshaped the ways organizations functions and societies behave. Medical infrastructure was unaffordable and unsupportive which created high distress in the Indian society, especially for poor. At this juncture, some pharmaceutical firms made a unique social investment when they reduced price of drugs used to treat COVID-19 patients. This study aims to examine how the market and the society respond to the price reduction announcement during the psychological distress of COVID-19. Design/methodology/approach Market reactions have been analyzed by conducting an event study on stock market data and visual analytics-based sentiment analysis on Twitter data. Findings Overall, this study finds positive abnormal returns on the day and around the day of event. Interestingly, this study finds that returns during the time of high distress are significantly higher. Sentiment analysis conveys that net sentiment is favorable to the pharmaceutical firms around the day of event and it sustains more during the time of high distress. Originality/value This study is unique in contributing to the business and industrial management literature by highlighting market reactions to social responsibility of business during the time of psychological distress in emerging economies.