The effect of vaccination during the COVID-19 for the restaurant industry

Seoki Lee; Banghui Liu; Soyeon Jung; Bora Kim

doi:10.1016/j.ijhm.2023.103451

The effect of vaccination during the COVID-19 for the restaurant industry

Int J Hosp Manag. 2023 Apr:110:103451. doi: 10.1016/j.ijhm.2023.103451. Epub 2023 Feb 14.

Authors

Seoki Lee^{1

2}, Banghui Liu³, Soyeon Jung⁴, Bora Kim⁵

Affiliations

¹ School of Hospitality Management, The Pennsylvania State University, 217 Mateer, University Park, PA 16802, USA.
² College of Hotel and Tourism Management, Kyung Hee University, Seoul, Korea.
³ Department of Economics, The Pennsylvania State University, USA.
⁴ William F. Harrah College of Hospitality, University of Nevada, Las Vegas, USA.
⁵ School of Hospitality and Tourism Management, University of Surrey, Austin Pearce Building, Guildford GU2 7XH, United Kingdom.

Abstract

The purpose of the study is to determine whether vaccination rates and the use of franchising have an impact on the volatility of stock returns in the restaurant industry. Based on the agency and resource scarcity theories, this study first examines the effect of vaccinations against COVID-19 on a restaurant firm's stock return volatilities caused by uncertainty during a crisis. The study further investigates whether firm-specific vaccination rates more greatly reduce stock return volatilities as the degree of franchising increases. With a two-way fixed-effects model, the study finds that the firm-specific vaccination rate reduces volatilities of the firm's stock returns. However, the study also finds an opposite direction to the moderating effect of franchising in that the more a restaurant firm franchises, the further the risk-reduction effect of its vaccination rate diminishes. Theoretical and practical implications along with limitations are discussed.

Keywords: COVID-19; Franchising; Restaurant industry; Stock return volatilities; Vaccination rate.