The stock price reaction of the COVID-19 pandemic on the airline, hotel, and tourism industries

David Carter, Sharif Mazumder, Betty Simkins and Eric Sisneros

Finance Research Letters, 2022, vol. 44, issue C

Abstract: This paper investigates the stock market performance from the second half of February through the latter portion of March 2020 for U.S. travel-related firms (airlines, restaurants, and hotels) in response to the COVID-19 pandemic. Clearly the reduction in travel was negative news for the travel industry; however, we focus on the factors used by market participants to price the information into stock prices. We find that larger firms with greater cash reserves and higher market-to-book ratios experienced less negative returns, while firms with greater leverage were penalized more. Additionally, we find that cash reserves were particularly important for hotels.

Keywords: COVID-19; Market reaction; Event study; Multi-variate regression model (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (17)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:44:y:2022:i:c:s1544612321001288

DOI: 10.1016/j.frl.2021.102047

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