LAUSR

Abstract This study uses public opinions on tourism in China in 2010–2017 as exogenous shocks to analyze how the capital market responds to public opinions on tourism events, and how the investor relations (IR) of listed firms affects investor responses in the tourism industry. We find that firms located in provinces where public opinions broke out experience significant decreases in cumulated abnormal returns, thereby indicating investors’ pessimistic reaction on negative events in the local tourism industry. Furthermore, firms’ IR facilitates the alleviation of market fluctuations, and this effect is more pronounced in private firms and firms spending less on advertising. This study offers important policy implications. First, the government and supervisors should formulate policies and provide feasible plans to improve investor relations. Second, firms could reduce unfavorable fluctuations of stock prices by strengthening their investor relations.