Modern Health Pandemics Crises and Stock Price Crash Risk

We investigate the impact of the crises caused by the modern health pandemics on the firm stock price’s risk of crashing. Further, we explore these associations by utilizing a comprehensive cross-country sample of 265,983 firm-year observations, collected from 39 countries during the five modern health crises (SARS in 2003, H1N1 in 2009, MERS in 2012, Ebola in 2012, and Zika in 2016). At this point, we observe that the outbreak of pandemic crises curbs the stock price crash risk, and the earlier a country adopts Basel Accord, the more the crash risk falls during the pandemic crises. These conclusions enable investors to trade with greater rationality and objectivity during the current pandemic situation caused by COVID-19. These conclusions also assure the regulators that the strengthening of risk prevention and control could enhance financial stability even during the outbreak of the pandemic