The Impact of Terrorist Bombings on the Market Values of Hospitality and Tourism Enterprises: Global Evidence From Turkey, Spain, and Indonesia

Madanoglu, Melih; Olsen, Michael D.; Kwansa, Francis A.

doi:10.1080/10913211.2007.10653842

Cited by 5 publications

(4 citation statements)

References 18 publications

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“…In a more related stream of literature, studies typically link terror attacks to the performance of tourism stocks (see, for example, [12,[26][27][28][29]). A general message from these studies is that terrorism dampens tourism demand and hence leads to the poor performance of tourism stocks.…”

Section: Literature Reviewmentioning

confidence: 99%

Geopolitical Risk and Tourism Stocks of Emerging Economies

et al. 2020

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A bulk of literature suggests that geopolitical events such as terrorist attacks dampen tourism demand. However, there is little research on whether this effect helps predict the return of the tourism equity sector. We provide country-level evidence on whether local and global geopolitical risk (GPR) predicts the first and second moments of tourism stocks in emerging economies. This objective was achieved by employing the non-parametric causality-in-quantiles (CiQ) model and a cross-quantilogram (CQ) test, which allowed us to uncover the predictive potential of GPR for the tourism sector equities. Our findings, obtained through the CiQ model, suggest that while both local and global GPRs carry significant potential for predicting the returns and volatility of tourism stocks of most emerging economies under normal market conditions, they seem to play no such role in certain countries. These countries include South Korea, for which only a limited number of tourism stocks trade on the domestic stock market compared to other sectors, and Colombia, for which both the domestic stock market and tourism sectors are at an emerging stage. Further, it turns out that, compared to its local counterpart, global GPR has a more pronounced predictive power for the tourism stocks of emerging economies. Finally, with some exceptions, the results are qualitatively similar, and hence reasonably robust, to those when a directional predictability model is applied. Given that geopolitical shocks are largely unanticipated, our findings underscore the importance of a robust tourism sector that can help the market recover to stability as well as an open economy that allows local investors to diversify country-specific risks in their portfolios. Implications and directions for future research are discussed.

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Section: Literature Reviewmentioning

confidence: 99%

Geopolitical Risk and Tourism Stocks of Emerging Economies

et al. 2020

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“…After the tragedy of the 9/11 attacks that had significant economic repercussions on tourism industry across the world, researcher have also focused on the impacts of terrorism on tourism-related companies' performance. However, there are relatively few studies that have been devoted to analyze the response of tourism companies' stock returns to terror events and political tensions (see, for example, Drakos, 2004;Kim and Gu, 2004;Madanoglu et al, 2007;Chen, 2011;Chang and Zeng, 2011;Zopiatis, 2018). Overall conclusion of these studies is that terrorism causes poor performance of T&L stock returns.…”

Section: Introductionmentioning

confidence: 99%

The impact of geopolitical risks on travel and leisure stocks

Demiralay¹,

Kılınçarslan

2019

Tourism Management

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The impact of geopolitical risks on tourism has not received scholarly attention in the existing literature. Previous studies focus on the effects of terrorism, which is a subset of geopolitical risks. Our paper fills this gap and contributes to the literature by analyzing the vulnerability of four regional Travel and Leisure (T&L) industry stock indices to geopolitical risks. Employing traditional and quantile regression techniques, our results suggest a greater sensitivity of T&L stock returns to geopolitical risks at times the industry performs poor, except for Asia & Pacific index that is the most resilient to geopolitical events. We find that the negative effects of geopolitical risks are mostly driven by the threat of adverse geopolitical events only during period of falling T&L stock prices. However, the realization of adverse geopolitical events significantly influences T&L stocks at all times. The results provide potential insights and implications for investors and tourism stakeholders.

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“…We expect that tourism companies are sensitive to monetary policy actions due to high operating and financial risks. Although the effects of many macroeconomic factors and other events (Madanoglu et al, 2007;Demir et al, 2017; on stock returns have been investigated in the Turkish tourism industry, we encountered no study investigating monetary policy announcements. Thus, we aimed to examine the effect of policy rates announced by the CBRT on Borsa İstanbul (BIST) tourism stock returns.…”

Section: Methodsmentioning

confidence: 99%

“…Although there are many studies on tourism stock markets, various studies related to events affecting tourism stocks and returns are summarized below. In their research, Madanoglu et al (2007) aimed to examine the effects of terrorist bomb attacks in Indonesia, Turkey, and Spain on the market values of hospitality and tourism businesses. As expected, it was found that the markets reacted negatively to terrorist acts, and the market reaction in Turkey was weaker than that in Spain.…”

Section: Studies Related To the Tourism Stock Marketmentioning

confidence: 99%

Analysis of the Effects of the Central Bank’s Interest Announcements on Tourism Index Returns

Günay

Bayraktaroğlu

2022

Sosyoekonomi

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This paper examines the impact of interest rate announcements by the Central Bank of the Republic of Turkey (CBRT) on Borsa İstanbul tourism index returns. During the period covering 2010-2020, the effects of the CBRT's 20 decrease announcements and eight increase announcements on tourism index daily returns were examined separately using the event study method. Moreover, the BIST100 index was analysed for comparison purposes. According to the study results in which ARs were calculated with the mean adjusted return model, out of 20 announcements of decreases in the interest rate, only 3 showed statistically significant ARs on the event date. This result indicates that tourism investors' reactions to policy rate announcements are weak and suggests the policy rate does not affect tourism investors' reactions. The findings for the BIST100 support this idea.

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The Impact of Terrorist Bombings on the Market Values of Hospitality and Tourism Enterprises: Global Evidence From Turkey, Spain, and Indonesia

Cited by 5 publications

References 18 publications

Geopolitical Risk and Tourism Stocks of Emerging Economies

Geopolitical Risk and Tourism Stocks of Emerging Economies

The impact of geopolitical risks on travel and leisure stocks

Analysis of the Effects of the Central Bank’s Interest Announcements on Tourism Index Returns

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