Submitting Campus

Daytona Beach

Department

College of Business

Document Type

Article

Publication/Presentation Date

6-2015

Abstract/Description

Airlines measure service quality based on different factors such as on-time performance, delays and cancellations, mishandled baggage and denied boardings. Among the above factors, recent studies show that long delays and cancellations have a major impact on airlines bottom line not only in terms of current costs but also in terms of loss of future revenue. Finance literature tells us that stock prices reflect the present value of future cash flows. In this paper we use event study methodology to examine how weather delay and cancellations affect current stock market returns for our sample airlines. We find some evidence that airline stocks are adversely affected by weather delays only when the delays are significant and widespread or persistent over a longer period. However the results are not significant and show that currently the stock market is not penalizing airlines for delays and there is no significant loss in the value for these firms.

Publication Title

Journal of International Finance and Economics

DOI

https://doi.org/10.18374/JIFE-15-2.7

Publisher

IABE

Required Publisher’s Statement

It is ok, when cited just mention the source.

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Included in

Finance Commons

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