| Summary: | Abstract
Since the outbreak of the COVID-19 epidemic in early 2020, the world economy has been severely affected. China, as one of the first countries to be hit by the outbreak and with the strictest lockdown policies, the domestic travel-related industries may also be affected. This paper examines the impact of the Wuhan and national lockdown on the stock returns of three industries, airline, tourism, and hotel & catering when COVID-19 first broke out in China.
Unlike other literature that examines stock market volatility and industry financial performance, this paper examines the impact of COVID-19 on the tourism industry by analyzing the average abnormal return (AAR) and cumulative average abnormal return (CAAR) of companies in these three industries during this period and to analyze the possible causes of abnormal returns. This paper uses a quantitative approach, the event study, to calculate the abnormal returns of the target industries and conducts significance tests on them for the study.
The research results are shown below. COVID-19 is found to have a negative impact on all tourism-related industries. When analyzing the sensitivity and self-regulation of the industries to the epidemic, the results of the three industries are different. The airline and tourism industries are highly sensitive to COVID-19 and can react quickly, while the hotel & catering industry has a lag in response. In the post-event period, the tourism and hotel & catering industries are able to self-regulate and the CAAR rebound to varying degrees, whereas the airline industry does not.
This paper examines in more detail the impact of the epidemic on the stock returns of the travel-related industries from industries perspectives and attempts to analyze the causes of the impact. With the coronavirus still existing and the tourism industry likely to continue to be affected, this paper's research may help to better understand the impact of the epidemic on the tourism industry and may also help these industries to mitigate the impact of the epidemic.
Keywords: COVID-19, Tourism-related Industry, Stock Return, the Event Study
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