Abstract

This paper examines the impact of natural disasters on corporate stock price performance in China, with a particular focus on state-owned enterprises (SOEs) and privately owned enterprises (POEs). Utilizing an event study methodology, we analyze the stock price reactions of Chinese companies to large-scale tropical cyclones from 2000 to 2022. Our findings indicate that these natural disasters have a significant negative impact on stock prices, particularly during the immediate impact period. SOEs, however, demonstrate greater resilience compared to POEs during the post-disaster recovery period, suggesting that political connections and government support provide advantages in mitigating market volatility. Cross-sectional regression analyses reveal that firms with high leverage, low profitability, smaller size, and low market valuation experience higher abnormal returns in the recovery phase, indicating a faster recovery rate. An industry-specific analysis further shows that the financial services sector performs better following natural disasters, potentially due to increased demand for financial products, access to government aid, and favorable investor sentiment.