Elsevier

Finance Research Letters

Volume 49, October 2022, 103099
Finance Research Letters

Do investors react differently? Evidence from hospitality sector during the covid-19 pandemic

https://doi.org/10.1016/j.frl.2022.103099Get rights and content
Under a Creative Commons license
open access

Highlights

  • There is no consensus on trading hospitality firms’ shares in first month of Covid-19.

  • In later stages, there is a buy pressure in the market leading to a positive reaction.

  • Investors react negatively to restaurant firms only in first month of the pandemic.

  • They respond positively to both hotel and restaurant firms in later stages.

  • Results are supported by the behavioral theory.

Abstract

Focusing on publicly traded U.S. eating & dining and lodging firms from 01July2019 to 30October2020, this paper examines investor reaction to restaurant and hotel firms throughout the Covid-19 pandemic. Results show that there is no consensus on buying or selling shares of different hospitality firms in the beginning. Consistent with the behavioral theory, the market reaction is mainly negative to restaurant firms matching with investors’ negative sentiments while investors are indifferent towards lodging firms. In later stages, investors trade less stocks, and the buy pressure in the market leads to a positive reaction to both types of firms.

Keywords

Investors
Covid-19
Hospitality sector
Eating & dining firms
Lodging firms
Behavioral theory

JEL classification

C33
G12
G32
L20

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