The financial impact of COVID-19: Evidence from an event study of global hospitality firms

John Clark, Nathan Mauck and Stephen W. Pruitt

Research in International Business and Finance, 2021, vol. 58, issue C

Abstract: This paper examines the daily abnormal stock price returns of a sample of 154 publicly-traded hospitality firms from 23 different countries representing over $400 billion in combined market capitalization around the time that COVID-19 was first viewed by stock market participants as a major—possibly even existential—threat. The findings of the study suggest that, financially, hotels performed better than restaurants, which themselves performed better than casinos. These findings are consistent with medical recommendations concerning the relative safety of various hospitality-related activities and, therefore, also with the tenets of financial market efficiency in the hospitality sector. Additional findings suggest that hospitality firms with strong balance sheets and income statements characterized by relatively low leverage ratios, high market value (consistent with a “too big to fail” mentality), and higher price/earnings ratios (implying higher relative profitability) all fared better than smaller, weaker firms. Although, in no case, did Bloomberg's proprietary environmental, social, and governance (ESG) variable possess any predictive power, variables reflecting cross-country cultural differences support Huynh’s (2020) finding that “individualism” was an important factor in explaining the economic impact of the COVID-19 pandemic on hospitality firms.

Keywords: COVID-19; Hospitality; Event study; Stock performance (search for similar items in EconPapers)
JEL-codes: G1 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:riibaf:v:58:y:2021:i:c:s0275531921000738

DOI: 10.1016/j.ribaf.2021.101452

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