earticle

영어

The 2020 Coronavirus pandemic is exerting an enormous shock on the Korean economy. Using data on the location of a firm’s headquarters and main bank branch, I find that the value of firms located in Daegu is being affected negatively since the announcement of a mass infection at the Shincheonji Daegu church. In particular, using proptech, I show that the distance between the infection’s epicenter and a firm’s headquarters affects the stock market reaction negatively. Furthermore, I find that the exogenous shock the Coronavirus crisis is causing has stronger negative effects on firms with high information asymmetry and those not Chaebol-affiliated. This study sheds light on our understanding of the economic effects of a city’s paralysis using a unique world event. My results suggest also the potential risk of clustered headquarters and factories attributable to unpredictable community quarantines.