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The effect of novel coronavirus pandemic on tourism share prices

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  • Liew, Venus Khim-Sen

Abstract

This paper aims to provide swift feedback to readers and investors on the early effect of novel coronavirus (COVID-19) pandemic outbreak on tourism industry. Three leading consolidators of hotel accommodations, airline tickets and travel services in the tourism industry around the globe, namely Booking Holdings Inc., Expedia Group and Trip.com Group Ltd. are chosen in this study. First, numerical description is performed on their shares prices and a set of control variables, to compare their performances before and during the lockdown due to COVID-19 outbreak. Next, this paper estimates OLS models with and without General AutoRegressive Conditional Heteroscedasticity (EGARCH) specification to establish the nature, significance and magnitude of the pandemic early effect on the shares performance of these online travel companies. This paper discovers a rapid decline in the performance of tourism industry amid the pandemic outbreak, from the perspective of three leading online travel companies, which derive their profits from tourists by providing them online hotel reservation, air-ticketing and packaged-tour business services around the globe. This significant adverse direct and indirect effects testify that tourism related businesses are extensively locked down by the pandemic outbreak. Future studies are encouraged to examine each of the tourism sectors for individual effects. This paper provides implications for investors to protect their wealth, and for policy makers to ensure sustainability of tourism industry in the pandemic outbreak and in the future. From the perspective of corporate finance, this paper empirically quantifies the early effect of COVID-19 on tourism industry for a quick snapshot.

Suggested Citation

  • Liew, Venus Khim-Sen, 2020. "The effect of novel coronavirus pandemic on tourism share prices," MPRA Paper 107985, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:107985
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    File URL: https://mpra.ub.uni-muenchen.de/107985/1/MPRA_paper_107985.pdf
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    References listed on IDEAS

    as
    1. Venus Khim-Sen Liew, 2004. "Which Lag Length Selection Criteria Should We Employ?," Economics Bulletin, AccessEcon, vol. 3(33), pages 1-9.
    2. Johansen, Soren, 1991. "Estimation and Hypothesis Testing of Cointegration Vectors in Gaussian Vector Autoregressive Models," Econometrica, Econometric Society, vol. 59(6), pages 1551-1580, November.
    3. Nelson, Daniel B, 1991. "Conditional Heteroskedasticity in Asset Returns: A New Approach," Econometrica, Econometric Society, vol. 59(2), pages 347-370, March.
    4. Chia, Ricky Chee-Jiun & Liew, Venus Khim-Sen & Rowland, Racquel, 2020. "Daily New Covid-19 Cases, The Movement Control Order, and Malaysian Stock Market Returns," MPRA Paper 107988, University Library of Munich, Germany.
    5. Claudiu Albulescu, 2020. "Coronavirus and financial volatility: 40 days of fasting and fear," Papers 2003.04005, arXiv.org.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Yaghoub Abdi & Xiaoni Li & Xavier Càmara-Turull, 2023. "Firm value in the airline industry: perspectives on the impact of sustainability and Covid-19," Palgrave Communications, Palgrave Macmillan, vol. 10(1), pages 1-24, December.
    2. Liew, Venus Khim-Sen, 2021. "Impact Of Wuhan Lockdown In Early Stage Of Covid-19 Outbreak On Sector Returns In Chinese Stock Market," MPRA Paper 107944, University Library of Munich, Germany.
    3. Yaghoub Abdi & Xiaoni Li & Xavier Càmara-Turull, 2020. "Impact of Sustainability on Firm Value and Financial Performance in the Air Transport Industry," Sustainability, MDPI, vol. 12(23), pages 1-23, November.
    4. Yang, Yang & Fan, Yawen & Jiang, Lan & Liu, Xiaohui, 2022. "Search query and tourism forecasting during the pandemic: When and where can digital footprints be helpful as predictors?," Annals of Tourism Research, Elsevier, vol. 93(C).
    5. Bouarar, Ahmed Chemseddine & Mouloudj, Kamel & Mouloudj, Smail, 2020. "The impact of coronavirus on tourism sector - an analytical study," MPRA Paper 107784, University Library of Munich, Germany, revised 30 Sep 2020.
    6. Emrah Koçak & Tarik Dogru & Khurram Shehzad & Umit Bulut, 2023. "The economic implications of the COVID-19 outbreak on tourism industry: Empirical evidence from Turkey," Tourism Economics, , vol. 29(3), pages 742-758, May.
    7. Ying Wang & Hongwei Zhang & Wang Gao & Cai Yang, 2023. "Spillover effects from news to travel and leisure stocks during the COVID-19 pandemic: Evidence from the time and frequency domains," Tourism Economics, , vol. 29(2), pages 460-487, March.
    8. Emrah Koçak & Umit Bulut & Angeliki N. Menegaki, 2022. "The resilience of green firms in the twirl of COVID‐19: Evidence from S&P500 Carbon Efficiency Index with a Fourier approach," Business Strategy and the Environment, Wiley Blackwell, vol. 31(1), pages 32-45, January.
    9. Bilal & Adeel Nasir & Umar Farooq & Muhammad Farhan Bashir, 2024. "Stock returns, government response strategies, and daily new case bursts during COVID‐19: A cross‐country perspective," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 29(1), pages 465-485, January.
    10. Faik Bilgili & Emrah Koçak & Sevda Kuşkaya, 2023. "Dynamics and Co-movements Between the COVID-19 Outbreak and the Stock Market in Latin American Countries: An Evaluation Based on the Wavelet-Partial Wavelet Coherence Model," Evaluation Review, , vol. 47(4), pages 630-652, August.
    11. Md. Mazharul Islam & Majed Alharthi, 2022. "Impact of COVID-19 on the Quality of Life of Households in Saudi Arabia," IJERPH, MDPI, vol. 19(3), pages 1-22, January.
    12. Jong, Meng-Chang & Soh, Ann-Ni, 2021. "Responsible Recovery from COVID-19: An Empirical Overview of Tourism Industry," MPRA Paper 107661, University Library of Munich, Germany.
    13. Jong, Meng-Chang, 2020. "Empirical Review on Tourism Demand and COVID-19," MPRA Paper 103919, University Library of Munich, Germany.

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    More about this item

    Keywords

    coronavirus pandemic; COVID-19; tourism; share prices;
    All these keywords.

    JEL classification:

    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets

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    This paper has been announced in the following NEP Reports:

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