Government Intervention and Market Response: Stock Price Evidence from Tourism and Hospitality during COVID-19

Abstract

The COVID-19 pandemic severely disrupted global tourism and hospitality sectors, prompting governments worldwide to implement economic interventions to stabilize markets. This paper investigates the impact of these policy responses—such as financial stimulus, wage subsidies, and tax deferrals—on the stock prices of publicly traded tourism and hospitality companies. Focusing on event study methodology and a sample drawn from both developed and emerging markets, the study examines investor reactions to major announcements. Findings reveal that markets responded positively to early fiscal and monetary interventions, especially those directly supporting the industry. However, the magnitude and sustainability of stock price reactions varied by region, firm size, and pre-crisis financial health. The study underscores the importance of timely, targeted policy support in mitigating sector-specific financial distress during global crises.