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.