Abstract
We find that firms’ financial resources play an important role in mitigating the spread of COVID-19. We study nursing homes—whose residents account for over one-third of all U.S. COVID-19 deaths—at a time when investment in risk mitigation was costly and critical. Facilities with less liquidity and those experiencing more severe cash flow shocks had more cases of COVID-19. The importance of cash flow is further supported by tests exploiting state-level variation in Medicaid reimbursement expansion. Evidence on personal protective equipment supplies suggests a lack of financial resources leads to lower investment in risk mitigation.
| Original language | English |
|---|---|
| Pages (from-to) | 1-35 |
| Number of pages | 35 |
| Journal | Review of Corporate Finance Studies |
| Volume | 12 |
| Issue number | 1 |
| DOIs | |
| State | Published - Feb 2023 |
Bibliographical note
Publisher Copyright:© The Author(s) 2022. Published by Oxford University Press on behalf of The Society for Financial Studies. All rights reserved.
Funding
We are grateful to Ashvin Gandhi, John Griffin, Umit Gurun, Katerina Ivanov, Ralph Koijen, Sahil Raina, Merih Sevilir, Kandarp Srinivasan, Alexander Wagner, and Constantine Yannelis and to conference and seminar participants at the Eastern Finance Association, ECGI Corporations and COVID-19, Financial Intermediation Research Society, the University of Connecticut, the University of Kentucky, and the Western Finance Association for helpful comments on the paper.
| Funders | Funder number |
|---|---|
| Connecticut 06520 Yale University New Haven Connecticut 06520 | |
| Western Finance Association | |
| University of Kentucky | |
| Eastern Finance Association | |
| Financial Intermediation Research Society | |
| Constantine Yannelis | |
| ECGI | COVID-19 |
ASJC Scopus subject areas
- Business and International Management
- Finance
- Economics and Econometrics