Boom and Gloom

53 Pages Posted: 29 Mar 2013 Last revised: 3 May 2014

See all articles by Renáta Kosová

Renáta Kosová

Cornell University - School of Hotel Administration

Praveen Kumar

University of Houston - Department of Finance

Paul Povel

University of Houston - Department of Finance, C.T. Bauer College of Business

Giorgo Sertsios

Universidad de los Andes, Chile

Date Written: May 2, 2014

Abstract

We study the performance of investments made at different points of an investment cycle. We use a large data set covering hotels in the U.S., with rich details on their location, characteristics and performance. We find that hotels built during hotel construction booms underperform their peers. For hotels built during local hotel construction booms, this underperformance persists for several decades. We examine possible explanations for this long-lasting underperformance. The evidence is consistent with information-based herding explanations.

Keywords: Investment cycles, booms, herding, competition

JEL Classification: G31, E32, E22, D83, R33

Suggested Citation

Kosova, Renata and Kumar, Praveen and Povel, Paul and Sertsios, Giorgo, Boom and Gloom (May 2, 2014). Available at SSRN: https://ssrn.com/abstract=2240479 or http://dx.doi.org/10.2139/ssrn.2240479

Renata Kosova

Cornell University - School of Hotel Administration ( email )

School of Hotel Admin.
545B Statler Hall
Ithaca, NY 14853
United States
606-254-3383 (Phone)
607-255-1355 (Fax)

HOME PAGE: http://www.hotelschool.cornell.edu/research/facultybios/faculty.html?id=204

Praveen Kumar

University of Houston - Department of Finance ( email )

Houston, TX 77204
United States
713-743-4770 (Phone)
713-743-4789 (Fax)

Paul Povel (Contact Author)

University of Houston - Department of Finance, C.T. Bauer College of Business ( email )

University of Houston
334 Melcher Hall
Houston, TX 77204
United States
713-743-4759 (Phone)

HOME PAGE: http://www.bauer.uh.edu/povel

Giorgo Sertsios

Universidad de los Andes, Chile ( email )

Mons. Álvaro del Portillo
Las Condes
Santiago, 12.455
Chile

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