Cultural dimensions and stock market response: analyzing the impact of covid-19 pandemic on individualism and power distance

Abstract

The purpose of study is to analyze the stock market reaction to Covid-19 pandemic in framework of cultural diversity that is individualism and power distance. This study considered daily data of stock market, growth in Covid-19 confirm cases and cultural values for 40 countries from January 2020 to December 2021. The Covid 19 cases data were collected from the website of Corona-virus Resource Centre (JHU-CRC) John Hopkins University and other variables like GDP, economic freedom, stringency index from the WB, IMF and OXFORD COVID-19 Government Response Stringency index of the world. The average returns are negative and fluctuated during pandemic. The finding shows the presence of cultural effect as a moderator and indicates that stock markets are more affected during the pandemic where individualism and power distance is high. The study recommends the significance role of human behavior integrating the cultural differentiation and substantial repercussions for policy makers, academicians and investors.