IDEAS home Printed from https://ideas.repec.org/a/bpj/bejeap/v9y2009i1n13.html
   My bibliography  Save this article

The Impact of Smoking Bans on the Hospitality Industry: New Evidence from Stock Market Returns

Author

Listed:
  • Tomlin Jonathan T.

    (LECG Inc.)

Abstract

The majority of over 150 studies conclude that smoking bans do not have adverse effects on the revenues, profits, or employment of hospitality industry firms. However, several important criticisms have recently been raised which call into question many of the prior results. I examine the market value impact of a proposed smoking ban using a sample and methodology not subject to the perceived shortcomings in prior studies - an event study on the Indian hospitality industry. Contrary to the results in most prior studies, I find negative abnormal stock returns to portfolios of the hospitality industry firms examined upon the announcement of a proposed smoking ban. These results support the conclusion that a smoking ban lowered the aggregate market value of these firms.

Suggested Citation

  • Tomlin Jonathan T., 2009. "The Impact of Smoking Bans on the Hospitality Industry: New Evidence from Stock Market Returns," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 9(1), pages 1-19, March.
    • Handle: RePEc:bpj:bejeap:v:9:y:2009:i:1:n:13
    DOI: 10.2202/1935-1682.2069
    as

    Download full text from publisher

    File URL: https://doi.org/10.2202/1935-1682.2069
    Download Restriction: For access to full text, subscription to the journal or payment for the individual article is required.
    File URL: https://libkey.io/10.2202/1935-1682.2069?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Benjamin C. Alamar & Stanton A. Glantz, 2004. "Smoke‐free Ordinances Increase Restaurant Profit and Value," Contemporary Economic Policy, Western Economic Association International, vol. 22(4), pages 520-525, October.
    2. Maynes, Elizabeth & Rumsey, John, 1993. "Conducting event studies with thinly traded stocks," Journal of Banking & Finance, Elsevier, vol. 17(1), pages 145-157, February.
    3. Michael L. Marlow, 2008. "Honestly, Who Else Would Fund Such Research? Reflections of a Non-Smoking Scholar," Econ Journal Watch, Econ Journal Watch, vol. 5(2), pages 240-268, May.
    4. Gupta, Shreekant & Goldar, Bishwanath, 2005. "Do stock markets penalize environment-unfriendly behaviour? Evidence from India," Ecological Economics, Elsevier, vol. 52(1), pages 81-95, January.
    5. Karafiath, Imre, 1988. "Using Dummy Variables in the Event Methodology," The Financial Review, Eastern Finance Association, vol. 23(3), pages 351-357, August.
    6. Alamar, B C & Glantz, Stanton A. Ph.D., 2004. "Smoke-free ordinances increase restaurant profit and value," University of California at San Francisco, Center for Tobacco Control Research and Education qt91w950j4, Center for Tobacco Control Research and Education, UC San Francisco.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Zhang, Jing Hua & Tam, Kwo Ping & Zhou, Nan, 2016. "Do smoking bans always hurt the gaming industry? Differentiated impacts on the market value of casino firms in Macao," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy (IfW Kiel), vol. 10, pages 1-32.
    2. Nicolau, Juan Luis & Sharma, Abhinav, 2022. "A review of research into drivers of firm value through event studies in tourism and hospitality: Launching the Annals of Tourism Research curated collection on drivers of firm value through event stu," Annals of Tourism Research, Elsevier, vol. 95(C).
    3. Huang, Xuan & An, Haizhong & Fang, Wei & Gao, Xiangyun & Wang, Lijun & Sun, Xiaoqi, 2016. "Impact assessment of international anti-dumping events on synchronization and comovement of the Chinese photovoltaic stocks," Renewable and Sustainable Energy Reviews, Elsevier, vol. 59(C), pages 459-469.
    4. Jérôme Adda & Samuel Berlinski & Stephen Machin, 2012. "Market Regulation and Firm Performance: The Case of Smoking Bans in the United Kingdom," Journal of Law and Economics, University of Chicago Press, vol. 55(2), pages 365-391.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Jerome Adda & Samuel Berlinski & V. Bhaskar & Stephen Machin, 2009. "Market regulation and firm performance: the case of smoking bans in the UK," IFS Working Papers W09/13, Institute for Fiscal Studies.
    2. Jérôme Adda & Samuel Berlinski & Stephen Machin, 2012. "Market Regulation and Firm Performance: The Case of Smoking Bans in the United Kingdom," Journal of Law and Economics, University of Chicago Press, vol. 55(2), pages 365-391.
    3. Yanxia Wei & Ron Borland & Pinpin Zheng & Hua Fu & Fan Wang & Jingyi He & Yitian Feng, 2019. "Evaluation of the Effectiveness of Comprehensive Smoke-Free Legislation in Indoor Public Places in Shanghai, China," IJERPH, MDPI, vol. 16(20), pages 1-11, October.
    4. Benjamin C. Alamar & Stanton A. Glantz, 2008. "Externalities in the Workplace: A Response to a Rejoinder to a Response to a Response to a Paper," Econ Journal Watch, Econ Journal Watch, vol. 5(2), pages 169-173, May.
    5. Renaud Foucart, 2017. "Group Consumption and Product Diversity: The Case of Smoking Bans," Journal of Industrial Economics, Wiley Blackwell, vol. 65(3), pages 559-584, September.
    6. Michael Kvasnicka & Harald Tauchmann, 2012. "Much ado about nothing? Smoking bans and Germany's hospitality industry," Applied Economics, Taylor & Francis Journals, vol. 44(35), pages 4539-4551, December.
    7. Steven G. Medema, 2020. "The Coase Theorem at Sixty," Journal of Economic Literature, American Economic Association, vol. 58(4), pages 1045-1128, December.
    8. Reichmann, Gerhard & Sommersguter-Reichmann, Margit, 2012. "The Austrian Tobacco Act in practice – Analysing the effectiveness of partial smoking bans in Austrian restaurants and bars," Health Policy, Elsevier, vol. 104(3), pages 304-311.
    9. Ahlfeldt Gabriel M. & Maennig Wolfgang, 2010. "Impact of Non-smoking Ordinances on Hospitality Revenues: The Case of Germany," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 230(5), pages 506-521, October.
    10. Tami Gurley-Calvez & George W. Hammond & Randall A. Childs, 2014. "Labor Market Impacts Of Smoking Regulations On The Restaurant Industry," Contemporary Economic Policy, Western Economic Association International, vol. 32(4), pages 681-694, October.
    11. David R. Henderson, 2007. "Smoking in Restaurants: Who Best to Set the House Rules?," Econ Journal Watch, Econ Journal Watch, vol. 4(3), pages 284-291, September.
    12. Ljudevit Pranic & Snjezana Pivac & Anela Colak, 2013. "Cafe Owners Attitudes Before The Enactment Of A Smoke-Free Legislation In Transition Countries," Economic Thought and Practice, Department of Economics and Business, University of Dubrovnik, vol. 22(1), pages 57-78, june.
    13. Annette Hofmann & Martin Nell, 2012. "Smoking bans and the secondhand smoking problem: an economic analysis," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 13(3), pages 227-236, June.
    14. Silvia Tiezzi, 2009. "The Economic Impact of Clean Indoor Air Laws: A Review of Alternative Approaches and of Empirical findings," Department of Economics University of Siena 570, Department of Economics, University of Siena.
    15. Robert K. Fleck & F. Andrew Hanssen, 2008. "Why Understanding Smoking Bans Is Important For Estimating Their Effects: California’S Restaurant Smoking Bans And Restaurant Sales," Economic Inquiry, Western Economic Association International, vol. 46(1), pages 60-76, January.
    16. Allen Blackman, 2010. "Alternative Pollution Control Policies in Developing Countries," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 4(2), pages 234-253, Summer.
    17. Corbet, Shaen & Larkin, Charles & McMullan, Caroline, 2020. "The impact of industrial incidents on stock market volatility," Research in International Business and Finance, Elsevier, vol. 52(C).
    18. Suchard, Jo-Ann, 2005. "The use of stand alone warrants as unique capital raising instruments," Journal of Banking & Finance, Elsevier, vol. 29(5), pages 1095-1112, May.
    19. Omaima A.G. Hassan & Peter Romilly, 2018. "Relations between corporate economic performance, environmental disclosure and greenhouse gas emissions: New insights," Business Strategy and the Environment, Wiley Blackwell, vol. 27(7), pages 893-909, November.
    20. Angosto-Fernández Pedro Luis & Ferrández-Serrano Victoria, 2022. "World capital markets facing the first wave of COVID-19: Traditional event study versus sensitivity to new cases," Economics and Business Review, Sciendo, vol. 8(4), pages 5-38, December.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bpj:bejeap:v:9:y:2009:i:1:n:13. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Peter Golla (email available below). General contact details of provider: https://www.degruyter.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.