How valuable is corporate adaptation to crisis? Estimates from Covid-19 work-from-home announcements
Adlai Fisher, Jiří Knesl, Ryan C.Y. Lee
Journal of Financial Economics · 2025 · Volume 174
DOI: 10.1016/j.jfineco.2025.104168
Abstract
This article investigates predictors and benefits of corporate adaptation to crisis, adding a new dimension to studies of flexibility and resilience based on ex ante characteristics. We produce a unique sample of work-from-home announcements scraped from company websites during Covid-19. The announcers’ valuations increased by 3%–5% and risk declined versus matches, consistent with real-options theory under asymmetric information. We estimate characteristics, including subtle textual topics from 10-Ks, that predicted adaptation, show faster price response following Bloomberg coverage, and real advantages in subsequent operating performance. Corporate adaptation to crisis adds value and reduces risk, beyond information in firm characteristics.
Keywords
Event studies, Work from home, Intangible capital, Corporate resilience, Corporate flexibility, Textual analysis, Announcements
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