The stock price reaction of the COVID-19 pandemic on the airline, hotel, and tourism industries.

This paper investigates the stock market performance from the second half of February through the latter portion of March 2020 for U.S. travel-related firms (airlines, restaurants, and hotels) in response to the COVID-19 pandemic. Clearly the reduction in travel was negative news for the travel industry; however, we focus on the factors used by market participants to price the information into stock prices. We find that larger firms with greater cash reserves and higher market-to-book ratios experienced less negative returns, while firms with greater leverage were penalized more. Additionally, we find that cash reserves were particularly important for hotels.

COVID-19: Fear of pandemic and short-term IPO performance.

This study analyzes the relationship between COVID-19 related fear and short-term IPO performance. Though the average market-adjusted initial return of IPOs in the year 2020 is higher than that of the last four decades, it decreases if fear of pandemic increases. The evidence is robust when we use matching firm-adjusted initial returns. Next, we analyze the persistence of performance after the IPO date. The results show that the performance of IPO firms is more sensitive to the fear of the pandemic than the performance of similar existing firms.

How important is social trust during the COVID-19 crisis period? Evidence from the Fed announcements.

During the COVID-19 crisis period, firms headquartered in high social trust US states perform better than their counterparts from the low social trust states. Stock returns over the crisis period are 3 to 4 percentage points higher, on average, if social trust increases by one standard deviation. The association is stronger for firms of more affected industries (COVID-19 industries). More specifically, a one standard deviation increase of social trust associates with a 6.45% increase of C A R if firms belong to the COVID-19 industries. Next, I analyze the stock market reactions to the Fed's announcements on March 23, 2020. The results show that firms headquartered in the high trust states benefit less from the announcements because these firms can access to other external financings cheaply. The average three-day announcement C A R and B H A R (FF 3-factor adjusted) are higher by 2.5% and 2.6% respectively if firms headquartered in low trust states.