Vertical integration and corporate value under uncertainty shock: Evidence from the COVID-19 pandemic
Using the exogenous shock of the COVID-19 pandemic, we examine whether vertical integration creates value for firms when facing increasing uncertainty. Using cross-sectional data during the outbreak of the COVID-19 pandemic, we find that there is a significant and positive correlation between vertic...
| Main Authors: | , , , |
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| Format: | Article |
| Language: | English |
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KeAi Communications Co. Ltd.
2022-12-01
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| Series: | China Economic Quarterly International |
| Subjects: | |
| Online Access: | http://www.sciencedirect.com/science/article/pii/S2666933122000491 |
| _version_ | 1797976379464089600 |
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| author | Chun Yuan Chunxiao Geng Jian Sun Huaigu Cui |
| author_facet | Chun Yuan Chunxiao Geng Jian Sun Huaigu Cui |
| author_sort | Chun Yuan |
| collection | DOAJ |
| description | Using the exogenous shock of the COVID-19 pandemic, we examine whether vertical integration creates value for firms when facing increasing uncertainty. Using cross-sectional data during the outbreak of the COVID-19 pandemic, we find that there is a significant and positive correlation between vertical integration and cumulative abnormal return in the event window of the COVID-19. Furthermore, when external transaction costs are higher or internal organization costs are lower during the COVID-19 pandemic, the above results are more pronounced. Our results indicate that vertical integration could avoid uncertainty, reduce transaction costs, hence improving corporate value, providing empirical evidence for theories about the uncertainty and vertical integration in transaction-cost economics. |
| first_indexed | 2024-04-11T04:50:00Z |
| format | Article |
| id | doaj.art-7063d64da4544799b16a3a904d52b9d5 |
| institution | Directory Open Access Journal |
| issn | 2666-9331 |
| language | English |
| last_indexed | 2024-04-11T04:50:00Z |
| publishDate | 2022-12-01 |
| publisher | KeAi Communications Co. Ltd. |
| record_format | Article |
| series | China Economic Quarterly International |
| spelling | doaj.art-7063d64da4544799b16a3a904d52b9d52022-12-27T04:38:55ZengKeAi Communications Co. Ltd.China Economic Quarterly International2666-93312022-12-0124239251Vertical integration and corporate value under uncertainty shock: Evidence from the COVID-19 pandemicChun Yuan0Chunxiao Geng1Jian Sun2Huaigu Cui3School of Accountancy, Central University of Finance and Economics, Beijing, ChinaSchool of Accountancy, The Chinese University of Hong Kong, Hong Kong, China; Corresponding author. 12 Chak Cheung Street, Shatin, N.T., Hong Kong, China.School of Accountancy, Central University of Finance and Economics, Beijing, ChinaSchool of Accountancy, Central University of Finance and Economics, Beijing, ChinaUsing the exogenous shock of the COVID-19 pandemic, we examine whether vertical integration creates value for firms when facing increasing uncertainty. Using cross-sectional data during the outbreak of the COVID-19 pandemic, we find that there is a significant and positive correlation between vertical integration and cumulative abnormal return in the event window of the COVID-19. Furthermore, when external transaction costs are higher or internal organization costs are lower during the COVID-19 pandemic, the above results are more pronounced. Our results indicate that vertical integration could avoid uncertainty, reduce transaction costs, hence improving corporate value, providing empirical evidence for theories about the uncertainty and vertical integration in transaction-cost economics.http://www.sciencedirect.com/science/article/pii/S2666933122000491Vertical integrationCorporate valueCOVID-19 |
| spellingShingle | Chun Yuan Chunxiao Geng Jian Sun Huaigu Cui Vertical integration and corporate value under uncertainty shock: Evidence from the COVID-19 pandemic China Economic Quarterly International Vertical integration Corporate value COVID-19 |
| title | Vertical integration and corporate value under uncertainty shock: Evidence from the COVID-19 pandemic |
| title_full | Vertical integration and corporate value under uncertainty shock: Evidence from the COVID-19 pandemic |
| title_fullStr | Vertical integration and corporate value under uncertainty shock: Evidence from the COVID-19 pandemic |
| title_full_unstemmed | Vertical integration and corporate value under uncertainty shock: Evidence from the COVID-19 pandemic |
| title_short | Vertical integration and corporate value under uncertainty shock: Evidence from the COVID-19 pandemic |
| title_sort | vertical integration and corporate value under uncertainty shock evidence from the covid 19 pandemic |
| topic | Vertical integration Corporate value COVID-19 |
| url | http://www.sciencedirect.com/science/article/pii/S2666933122000491 |
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