The impact of government policy responses on airline stock return during the COVID-19 crisis

Suntichai Kotcharin, Sakkakom Maneenop and Anutchanat Jaroenjitrkam

Research in Transportation Economics, 2023, vol. 99, issue C

Abstract: This study investigates the impact of government policies on the weekly stock returns of 73 global airline companies in 36 countries during the COVID-19 pandemic. Using panel data estimation techniques with country and week fixed effects, we find that the overall government policies, containment and health policies, and stringency policies increase airline stock returns. Economic support policies do not significantly impact the returns. Containment and health policies mitigate the negative effect of the pandemic on airline stock returns, whereas economic support policies strengthen the adverse effect. The government interventions' impact on airline stock returns is heterogeneous based on the airlines' headquarters but not on their ownership structures and business operations. Our empirical findings provide salient insights for protecting airline companies by reflecting on which government policy responses are effective and how governments should invest and prioritize policies. The results also present practical implications for airline managers, investors, and policymakers concerned with the current pandemic and future crises.

Keywords: COVID-19 policy responses; Airline stock returns; Containment and health; Economic support (search for similar items in EconPapers)
JEL-codes: G12 G18 G38 R48 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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DOI: 10.1016/j.retrec.2023.101298

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