Coronavirus Disease (COVID-19) Pandemic and Stock Price Crashes: A Cross-National Correlational Approach

The coronavirus disease (COVID-19) pandemic is a serious threat to public health and the economy. Importantly, there was a stock price crash on Monday, March 9, 2020, followed by a similar crash one week later. Leading global indices substantially dropped. Based on previous research indicating that the news media may elicit effects on stock prices, we hypothesized that the amount of news coverage about COVID-19 within a given country would predict the size of the stock price drop in that country. Using data for N = 58 nations from five continents, we observed average stock price drops of 6.57% (week 1) and 6.43% (week 2). Using a cross-national correlational approach, we found a positive relationship between the amount of news coverage about COVID-19 and the extent of the stock price drop. Actual severity within a given country (indicated by the number of confirmed cases and deaths, based on data provided by the World Health Organization) and public attention (indicated by COVID-19-related Internet search engine volume) did not predict the extent of the stock price drop in multivariate analyses. Correlational evidence is consistent with the idea that intensive media reporting on a threatening pandemic with uncertain negative consequences on health, social life, and the economy may provoke substantial reactions in the market, with as yet unknown indirect effects on public health. However, the causal order of media attention and stock price drops should be assessed with caution.