Has Risk Capital Increased Airlines Capabilities to Respond to Crisis
(2021) BUSN79 20211Department of Business Administration
- Abstract
- Purpose: This paper aims to empirically investigate if pre-pandemic risk-capital was able to
mitigate the negative impact of the COVID-19 pandemic on employees and investments in
the airline industry
Method: The base econometric methodology used is multiple regression analysis with the
four risk capitals interacting with a dummy variable for the year 2020 when the COVID-19
pandemic hit.
Theory: The broad theoretical framework is based on financial constraints and risk capital in
the form of economic capital and risk capacity.
Empirical foundation: 399 firm-year observations from the airline industry between 2016
and 2020 make up the empirical foundation of this paper.
Conclusions: Liquidity in the form of cash reserves was proven... (More) - Purpose: This paper aims to empirically investigate if pre-pandemic risk-capital was able to
mitigate the negative impact of the COVID-19 pandemic on employees and investments in
the airline industry
Method: The base econometric methodology used is multiple regression analysis with the
four risk capitals interacting with a dummy variable for the year 2020 when the COVID-19
pandemic hit.
Theory: The broad theoretical framework is based on financial constraints and risk capital in
the form of economic capital and risk capacity.
Empirical foundation: 399 firm-year observations from the airline industry between 2016
and 2020 make up the empirical foundation of this paper.
Conclusions: Liquidity in the form of cash reserves was proven to be the most efficient risk
capital at absorbing revenue shocks and mitigating reductions in both employees and
investments in the airline industry. Moreover, economic capital in the form of a higher equity
ratio had a positive relationship with investments. No strong support was found for cash
margin or operating flexibility to have any buffering effects. (Less)
Please use this url to cite or link to this publication:
http://lup.lub.lu.se/student-papers/record/9064710
- author
- Blecher, Filip LU and Persson, Oskar LU
- supervisor
- organization
- alternative title
- Pre-pandemic risk capitals’ ability to mitigate the Impact of COVID-19 on employees and investments
- course
- BUSN79 20211
- year
- 2021
- type
- H1 - Master's Degree (One Year)
- subject
- keywords
- Economic capital, risk capacity, Covid-19, airline industry, financial constraints
- language
- English
- id
- 9064710
- date added to LUP
- 2021-10-04 08:54:22
- date last changed
- 2021-10-04 08:54:22
@misc{9064710, abstract = {{Purpose: This paper aims to empirically investigate if pre-pandemic risk-capital was able to mitigate the negative impact of the COVID-19 pandemic on employees and investments in the airline industry Method: The base econometric methodology used is multiple regression analysis with the four risk capitals interacting with a dummy variable for the year 2020 when the COVID-19 pandemic hit. Theory: The broad theoretical framework is based on financial constraints and risk capital in the form of economic capital and risk capacity. Empirical foundation: 399 firm-year observations from the airline industry between 2016 and 2020 make up the empirical foundation of this paper. Conclusions: Liquidity in the form of cash reserves was proven to be the most efficient risk capital at absorbing revenue shocks and mitigating reductions in both employees and investments in the airline industry. Moreover, economic capital in the form of a higher equity ratio had a positive relationship with investments. No strong support was found for cash margin or operating flexibility to have any buffering effects.}}, author = {{Blecher, Filip and Persson, Oskar}}, language = {{eng}}, note = {{Student Paper}}, title = {{Has Risk Capital Increased Airlines Capabilities to Respond to Crisis}}, year = {{2021}}, }