This research investigates the abnormal returns of 958 insurance companies from Australia, Canada, Germany, USA, UK, Brazil, India, and Indonesia under the COVID-19 scenario. This study deploys the event study methodology to analyse the effects of COVID-19 on stock returns both in the short and long terms. Results reveal that, overall, COVID-19 negatively affected the stock returns, particularly in the case of insurance firms operating in developing countries. This research also explores firm-specific determinants distinguishing the most affected insurance firms. It is found that firm size, systematic risk, price-earnings ratio, profitability, and dividend yield affect the intensity of abnormal returns in response to COVID-19 but in different event windows. The investors and policymakers should consider these factors in connection with the risk mitigating strategies.

Purpose: The purpose of this paper is to explain the multi-stage dynamic process of financial distress. An attempt is made to explore multiple adverse heterogeneous events of financial distress leading a firm closer to bankruptcy progressively. Design/methodology/approach: Sample comprises 321 ongoing, 54 suspended and 91 delisted non-financial firms from Pakistan Stock Exchange. Financial distress is segregated into three stages, i.e. profit reduction, mild liquidity (ML) and severe liquidity (SL). Flow diagrams are used to explain the transition of healthy firms through proposed stages of financial distress. Findings: Results showed that firms liquidated/winding-up by court documented SL problems and closed their operations well before the delisting year. It is found that healthy firms are more likely to face SL when faced ML problem at first stage. Distressed firms can recover to a healthy position at any stage, however after approaching to SL, recovery is less expected. Practical implications: The proposed process will provide a foundation for future studies to develop more relevant, robust and accurate early warning system of corporate failure that will help stakeholders to respond potential crisis accordingly and timely. Originality/value: Previously, most of the studies used the ex post definition of bankruptcy that is criticized due to the contextual application, sample bias and non-segregation by the degree of liquidity problems. The originality of the proposed ex ante model is its segregation into a three-stage process that can be generalized regardless of specific bankruptcy law.

This paper examined the firm-specific abnormal returns of transportation and travel services sectors from the USA, UK, France, China, India, Mexico, Turkey, and Thailand in response to Coronavirus Disease 2019 (COVID-19) using event study methodology. Our results revealed that investors in developed countries provide significant long term abnormal returns for the first 101 days. Furthermore, no significant cumulative average abnormal returns (CAAR) were found in response to the COVID-19 outbreak, travel restrictions, lockdown, stimulus package, and historical decline in oil prices except in the case of the USA. It is concluded that with the gradual increase in new cases and deaths, abnormal returns are also adjusted, making the effects of these events insignificant at the time of their occurrence. Results also showed that firms in developing countries recognized significant negative abnormal returns in response to the second wave of COVID-19. These results are useful for investors in devising investment strategies relevant to contextual settings.