Examining the Impact of Minimum Wage Policy on Hospitality Financial Performance Using Event Study Method

Abstract

ABSTRACT This study investigated the effect of the minimum wage policy on hospitality firm value and financial performance. The event study method (ESM) results revealed the significant impact of the introduction of minimum wage on firm value, implying that investors perceived minimum wage policy had a negative effect on profitability in the long run. Furthermore, substantial increases in the minimum wage beyond market expectations can be a threat to businesses. Findings offer evidence that minimum wage policy did affect financial performance; hence, implementing a balanced minimum wage policy to benefit all stakeholders including business owners is imperative for a win–win situation.