Do intangible assets provide corporate resilience? New evidence from infectious disease pandemics

Intangibles provide competitive advantages and enhance productivity and efficiency. We investigate whether accumulated intangible assets mitigate the adverse impact of pandemic shocks on corporate performance. Using a sample of 8738 unique U.S. firms during the period 1985-2020, we find that a firm's pre-pandemic intangible assets mitigate the pandemic-induced negative stock price reaction and operating performance. We also show that the resilience to pandemic shocks is driven by both internally generated and externally acquired intangible assets. Finally, we explore related channels, and find that intangible assets-driven corporate resilience to pandemic shocks is explained by positive investor sentiment, customer loyalty, and managerial ability. Importantly, corporate resilience to pandemic shocks emanating from intangibles holds for non-Covid pandemic periods. Overall, our study documents the critical role of intangible assets in safeguarding firms and investors from epidemic- and pandemic-induced shocks.