Impact of the COVID-19 pandemic: Evidence from the U.S. restaurant industry

Abstract

Highlights This study examines the relationship between various pre-pandemic firm characteristics and stock price reactions to COVID-19. This study employed GEE for analyses using STATA 15.1. Restaurant firms with larger size, more leverage, more cash flows, less ROA, and more internationalization are more resilient to stock declines. Dividend, franchising, institutional ownership, and managerial ownership did not show a significant moderating effect. This study contributes to the literature by providing insights into drivers of restaurant firm’s stock returns during the COVID-19 shock.

The impact of policy responses to COVID-19 on U.S. travel and leisure companies

“…The event study method showed a negative influence of epidemics on restaurants’ stock returns of restaurants. Song et al (2020) explore the impact of COVID-19 on U.S. restaurant firms' stock returns. It is shown that firms with a larger size, more leverage, more cash flow, lower Return on Assets (ROA), and more internationalization are more resilient to the effects of COVID-19.…”

“…While many studies have examined the impact of epidemics or pandemics on tourism demand (among others, see Zeng, Carter, & De Lacy, 2005 ; Kuo, Chen, Tseng, Ju, & Huang, 2008 ; Chen, 2011 ; Rosselló, Santana-Gallego, & Awan, 2017 ; Karabulut, Bilgin, Demir, & Doker, 2020 ), the effect on the stock returns of tourism and hospitality companies is not yet well-explored. There are a few exceptions, such as Chen, Jang, and Kim (2007) and Chen (2011) on Severe Acute Respiratory Syndrome (SARS); Kim, Kim, Lee, and Tang (2020) on the effect of nine epidemics; and more recently, Song, Yeon, and Lee (2020) on COVID-19. In general, previous articles ( Chen et al, 2007 ; Kim et al, 2020 ) adopted an event study approach by choosing the outbreak of an epidemic as the event.…”

“…To the best of our knowledge, we are the first to examine the impact of government responses to COVID-19 on stock returns of travel and leisure companies in the U.S. In a recent study, Song et al (2020) explore the impact of COVID-19 on U.S. restaurant firms’ stock returns. Our study focuses on the role of government responses while controlling for the impact of COVID-19.…”

“…Following Ding et al (2020) , Heyden and Heyden (2020) , and Song et al (2020) , we consider five pre-2020 characteristics of financial firms: size, profitability, tangibility, cash, and leverage. By examining these characteristics simultaneously, we can better identify the association between corporate characteristics and stock price reactions to government responses to COVID-19.…”

Should I stay, or should I go? Consumers' perceived risk and intention to visit restaurants during the COVID-19 pandemic in Brazil

“…Indeed, social distancing is promoted in the interest of public health and is necessary. However, the measure has important effects on the economy, especially in the restaurant sector ( National Restaurant Association, 2020 , Song et al, 2021 ). The restaurant sector has expanded substantially over the past few years.…”