Abstract
PurposeThis paper provides new evidence on Indian tourism firms by investigating the role of a firm's financial conditions typified by its leverage, earnings, size, cash holdings, and excess cash in moderating the pandemic-led idiosyncratic volatility in its stock prices.Design/methodology/approachThe authors employ a firm-level panel comprising 82 publicly-listed tourism firms from India. Firm risk is estimated for the period beginning January 2020 to December 2020.FindingsThis paper finds non-linear effects of the pandemic on the idiosyncratic risk of the sample firms. Precisely, stock price volatility rises, but as the market absorbs this information, volatility subsides even as the disease spreads further. Further, lower levels of past debt and earnings and higher cash holdings ameliorate the pandemic's effects on tourism firms' risk. Contrasting the view that “excess” cash reflects poor operational performance, we show that “excess” cash firms are better prepared to face the adverse effects of the pandemic.Research limitations/implicationsThis study’s sample period fully encompasses the first wave of the pandemic (January–December 2020) of the novel coronavirus infection spread.Originality/valueTo the best of the authors’ knowledge, this is the first study to assess the moderating effects of company fundamentals on the risk of Indian tourism firms. In doing so, the authors account for non-linear effects of the pandemic on firms' idiosyncratic volatility over time.
Subject
General Earth and Planetary Sciences,General Environmental Science
Reference77 articles.
1. Market share, firm innovation, and idiosyncratic volatility;Journal of Economics and Finance,2017
2. COVID-19 Pandemic and firm-level dynamics in the USA, UK, Europe, and Japan;International Review of Financial Analysis,2021
3. The cross-section of volatility and expected returns;The Journal of Finance,2006
4. To pool or not to pool: homogeneous versus heterogeneous estimators applied to cigarette demand;Review of Economics and Statistics,2000
5. Effects of COVID-19 crisis on small and medium-sized hotel operators: insights from Nepal;Anatolia,2021
Cited by
1 articles.
订阅此论文施引文献
订阅此论文施引文献,注册后可以免费订阅5篇论文的施引文献,订阅后可以查看论文全部施引文献