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Market-Based Solutions to Vital Economic Issues
News & Media
Aug 21, 2019

Institute Insights: The Impact of the Opioid Crisis on Firm Value and Investment

Featuring research by UNC Kenan-Flagler Business School Associate Professor of Finance Paige Ouimet, Assistant Professor of Finance Elena Simintzi and Ph.D. candidate Kailei Ye

In the first study of the impact of the opioid crisis on firms, UNC Kenan-Flagler researchers demonstrate the negative effects of opioid abuse on long-term firm growth, investment and valuation.

Paige Ouimet, associate professor of finance; Elena Simintzi, assistant professor of finance; and Kailei Ye, a PhD student, found:

  • Opioid abuse hurts firm growth in U.S. areas heavily affected by the opioid crisis.
  • In response, firms in those areas are more likely to invest in automation, technologies that can substitute for labor and mitigate the costs of the reduced labor pool.
  • There is a bright side: Firms with employees in areas that pass legislation limiting opioid prescriptions realize positive stock price gains when new laws are announced.

Read more in the UNC Kenan-Flagler Business School article, here.

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