Effects of epidemic disease outbreaks on financial performance of restaurants: Event study method approach

The present study aims to investigate the influence of macroscopic and infectious epidemic disease outbreaks on financial performance of the restaurant industry. Nine events on four epidemic disease outbreaks during 2004-2016 were analyzed. Event study method and Mann-Whitney U test were used to estimate the effect of three firm characteristics (brand reliability, advertising effects, and service types) on firms' value. This study confirmed the negative influence of epidemic disease outbreaks on the restaurant industry, and identified all the three firm characteristics serve as risk mitigating factors. This research contributes to the research body on the effects of epidemic disease outbreaks on the restaurant industry and assists practitioners in designing effective strategies to stabilize financial performance during unpredictable events.