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

Abstract

This paper analyzes the impact of government restrictions arising from the COVID-19 pandemic on stock returns of U.S. travel and leisure companies. We demonstrate that the stringency of government restrictions has a negative impact on stock returns even after controlling for the pandemic itself. Moreover, stock prices of travel and leisure firms with a smaller size, less tangibility, and higher cash reserves are more resilient to the COVID-19 related government restrictions. Restrictions have the highest impact on airlines, followed by travel and tourism and casinos and gambling sectors. Our empirical findings provide valuable policy implications for travel and leisure firm managers, financial investors, and policymakers.

The Impact of News about Pandemic on Borsa Istanbul during the COVID-19 Financial Turmoil

“…Many studies are deal with the impact of COVID-19 on the financial markets, such as the impact on stock market returns and volatility (Al-Awadhi et al, Alhammadi, 2020;Albulescu, 2020;Ali et al, 2020;Ashraf, 2020bAshraf, , 2020cBahrini & Filfilan, 2020;Contessi & Pierangelo, 2020;Harjoto et al, 2020;Mazur, Dang, & Vega, 2020;Rababah et al, 2020;Thorbecke, 2020;Topcu & Gulal, 2020), market illiquidity (Baig et al, 2020), contagion effect (Okorie & Lin, 2020), government interventions or responses against COVID-19 (Ashraf, 2020a;Zaremba et al, 2021;Zaremba et al, 2020), cryptocurrencies (Conlon & McGee, 2020;Corbet, Larkin, & Lucey, 2020;Goodell & Goutte, 2020), tourism and leisure sectors (Chen et al, 2020;Ghosh, 2020), uncertainty (Jeris & Nath, 2020), social trust (Mazumder, 2020), dividends (Krieger & Mauck, 2020), and commodity prices (Corbet, Goodell, & Günay, 2020;Devpura & Narayan, 2020;Huang & Zheng, 2020;Salisu, Ebuh, & Usman, 2020).…”

The Effect of Pandemic News on Stock Market Returns During the Covid-19 Crash: Evidence from International Markets

“…On March 11, 2020, the World Health Organization (WHO) declared a pandemic and warned countries to take precautions. The pandemic's threat has prompted people to alter their usual habits and governments to take extraordinary steps, such as issuing stay-at-home orders and travel bans, closing schools and businesses, mandating masks, and imposing similar restrictions (Ahundjanov et al, 2020;Chen et al, 2020;Nicola et al, 2020;) that have caused global economic downturns (Yilmazkuday, 2020) and crashes in financial sectors (Baker et al, 2020). Stock markets, especially in the U.S, Japan, Germany and the U.K, experienced a collapse of around 10%-20% (Akhtaruzzaman, Boubaker, & Sensoy, 2020;Ali, Alam, & Rizvi, 2020;Ashraf, 2020b;Zhang, Hu, & Ji, 2020).…”

Non-Intrusive Assessment of COVID-19 Lockdown Follow-Up and Impact Using Credit Card Information: Case Study in Chile

“…Our results comparing this activity topic in the year previous to the pandemic and the year of the pandemic show that Santiago citizens have changed their behaviors according to the lockdown and curfew policies. Though there is some literature on the disruption of supply chains due to COVID-19 [36], the impact on healthcare [37], forest degradation [38], the economic impact in African countries (e.g., the impact on cattle exports) [39], and on residents of some cities [40], there is little regarding the evaluation of the impact of COVID-19 on the people that work in the leisure/commerce sector in developed countries, except for some high-level analysis at the corporate level [41,42]. However, there is a large percentage of the labor force enrolled in the leisure and hospitality sector (i.e., more than 13 million employees in March 2021 in the US, according to workforce statistics https://www.bls.gov/iag/tgs/iag70.htm#iag70emp1 .f.p (accessed on 20 May 2021)) that may fall into poverty with ensuing systemic health critical issues.…”