Abstract
As COVID-19 pandemic hit the world since early 2020, one business sector in many countries that struggling to survive is tourism and its derivatives, such as restaurants and hotels. This study aims to examine the accuracy of the Springate and Grover models in predicting bankruptcy, as well as the effect on stock prices of tourism, restaurant, and hotel sector in Indonesia. The results show that all sample tourism, restaurant, and hotel companies are bankrupt under the Springate model, whilst according to Grover's model the findings are varied during the study period. Furthermore, the Grover model is implied to be more accurate than the Springate model. The effect of both prediction models on stock price appears dissimilar. Springate's prediction model suggests a positive and significant effect on stock prices, whereas there is no strong evidence about the effect of Grover’s prediction model.
Highlights
The world was shocked at the start of 2020 by the emergence of the COVID-19 (CoronaVirus Disease 19) pandemic, which affected all countries worldwide
The purpose of this study is to examine bankruptcy predictions using the Springate and Grover models, the level of accuracy of each model, and their impact on stock prices of tourism, restaurant, and hotel sector companies listed on the Indonesia Stock Exchange from Quarter I to Quarter III of 2020
According to the Grover model, the majority of the companies listed by the Indonesia Stock Exchange (IDX) in the tourism, restaurant, and hotel sectors in the first and second quarters of 2020 are in the healthy category, while there are similarities in the number of companies in the healthy category and bankrupt in the third quarter of 2020
Summary
The world was shocked at the start of 2020 by the emergence of the COVID-19 (CoronaVirus Disease 19) pandemic, which affected all countries worldwide. The loss of basic jobs, fears of contracting the virus, and the uncertainty surrounding the virus will result in lower public expenditure. Businesses reduce their cash flow, and workers may be laid off as a result of the inability of the company to pay their wages. This effect will cause people to postpone planned vacations, which will have a direct impact on the tourism and hospitality industries (Abdullah et al, 2020)
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