Graduation Year


Date of Submission


Document Type

Open Access Senior Thesis

Degree Name

Bachelor of Arts



Reader 1

Professor Peter McAniff

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Rights Information

2022 Andrew F Wraith


The onset COVID-19 Pandemic caused rippling effects throughout the global economy. Social distancing and stay at home orders shifted consumer demand, as the firmwide impact of these same policies led to supply chain shortages. The COVID-19 Pandemic induced a recession in 2020 that was unique from all others in US history. Throughout the beginning months of the Pandemic, firms rushed to raise debt, equity, and lines of credit, as public financing markets experienced increased volatility. How did the markets adapt to this sudden change? I examine the effect on stock returns of firmwide Balance Sheet strength as it changed throughout the Pandemic. Results indicate that firms with stronger Balance Sheets were better equipped to deal with these unexpected exogenous shocks and were rewarded with better stock returns. Balance sheet strength in the short term (liquidity) and the long term (solvency) were significant positive indicators of stock market return in 2020 Quarter 1. In later quarters, firms with more short-term liquidity had lower returns, which was explained by the opportunity cost of investing in liquid assets.